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The ability to negotiate vendor contracts effectively — getting the right products and services at the right price and with the right terms — is a crucial skill for IT organizations. Too often, enterprises move from one contract negotiation to another — and from negotiations for commodity purchases to those for complex, long-term, business-critical relationships — without proper planning. IT leaders need to get ahead of the negotiating curve by prioritizing renewals, renegotiations and new contracts. They must develop a disciplined negotiating process and advanced negotiating skills, so that the enterprise starts the process and engages negotiators early on. This approach will deliver better contracts, better vendor performance and better business performance. 
Consider These Factors to Determine Your Readiness Consider these elements before negotiating vendor contracts:
- The renewal cycle of key contracts. Identifying upcoming vendor contract negotiations, and prioritizing them by size, vendor importance and degree of complexity, will enable IT leaders to develop a disciplined plan for negotiations.
- The "owners" of vendor contracts. Determining the key internal stakeholders and understanding their requirements will make it possible to negotiate new contracts and renewals more effectively.
- Potential issues related to a contract negotiation, renewal or renegotiation.
Develop Vendor Contract Negotiation Capabilities in Three Phases Gartner recommends that IT leaders take a three-stage approach to negotiating vendor contracts:
- Strategize and Plan: Develop a calendar of key vendor contract renewals and new contract developments. Communicate contract requirements within the enterprise, and develop a negotiating team. Define the expected outcomes and roles and responsibilities.
- Assess Competencies: Collect and review the best practices for negotiating vendor contracts.
- Operate and Evolve: Staff and manage the negotiating team. Negotiate contract terms and conditions. Review operating processes, measure success and refine processes.
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