Tips For Navigating Enterprise Procurement

The complexity of buying is often overlooked despite being just as hard as selling.

Buyers are continually bombarded with look-alike value propositions, future promises, and the latest tech jargon, making it a daunting task to (1) identify the best fit, (2) make sense of more abstract solutions, and (3) understand how to sell in and gain internal buy-side approval.

Given the challenges in buying, the sell-side must be laser-focused on the value they offer, acting as consultants/subject matter experts who guide, manage, and proactively navigate the buying process on their side.

Hint: The effort and lift this takes should be built into your price.

It's crucial to understand that procurement's role is to streamline buying AND protect the organization (i.e., the golden goose) and the vendor (i.e., you) to ensure both parties are a relevant fit for each other – it's not as one-sided as many believe.

Here are ten tips for how to best navigate and possibly reduce your timeline:

1. Procurement As Your Quarterback (Engage Early): Procurement is the buy-side and sell-side liaison between Legal, IT/Tech, and Finance. It's best to engage the Procurement team as early as possible to educate (not rely on the champion) AND, most importantly, get your eyes on their Master Service Agreement (MSA). Many terms, such as required insurance coverage, liability, and intellectual property, must be ironed out – it's never too early to start and begin to educate yourself on their engagement terms. Hint: It’s best to ensure a commercial lawyer reviews and helps you understand your side.

2. Procurement's Approval Is Required For Payment: Procurement/Finance’s sign-off for releasing payment at larger companies is non-negotiable. Strict protocols are in place. Hint: Never engage in paid work expecting a business unit to fund or cover expenses directly.

3. Negotiating Working Capital/Payment Terms: Working capital is less of an asset for large organizations than startups. Hint: Eye this as a leverage point to "get" while you "give" in other negotiating aspects.

4. Hard Costs vs. Soft Costs: Finance departments often reject soft costs. They demand proof of hard cost savings, like cancellation of another contract or 3rd party staff augmentation reduction, rather than time saved/efficiency gains.
   Hint: Soft costs are hard to model

5. Procurement Timeline: Expect around ~3-month to work through the procurement process. Hint: In this market, it’s important to note that enterprises heavily involved in M&A activity; the timeline could easily double as IT resources are designated/assigned in other areas.

6. Give Them A Win (It’s Expected): Allow room for negotiation, anticipating savings of at least 30% off the suggested/listed Annual Contract Value (ACV). Expect possibly deeper discounts proportionate to the size of the company and weight of their logo. Hint: Ensure you have a corresponding buffer in your pricing on day 1.

7. Sensitive Financial Questions: Procurement's interest in your revenue is about risk assessment of the relationship rather than the actual dollar figures themselves – they want to know what percentage of your total revenue their contract represents AND the position they might put you (and possibly themselves) in if they churn in the future (and possibly fold you if the contract is too big). Read that one more time and a bit more slowly. Yes, this question is about protecting you. Stay focused on starting small (~$75K - $150K).

8. Contained Value Wins: Zero in on niche problems — define a small piece of the value chain that you can impact and drive actual results/proof. You can always work to widen the surface area you support. However, the more you try to sell initially, the harder it will be to get the deal done. Hint: You'll be compared to their pre-approved vendors. The broader the scope of work, the more likely you'll begin to enter the territory of their existing, trusted partnership base.

9. Vague, Broad Messaging Easily Sidelined: Avoid vague statements about being better than another solution (e.g., the existing incumbent) without clear evidence. Procurement will disregard such claims OR ask you to defend per their viewpoint. Reminder: Folks don't have the time to figure out if you're better than X solution/incumbent; that's a terrible way to anchor value. Hint: Focus on the things you can easily defend.
   

10. Truncated Contract/Engagement: Break down the engagement into phases (i.e., contracts) to streamline the process. If you can provide a service-based value, start there, as engagement requirements are far less arduous and simultaneously track the more complex elements that require an IT audit. The more complex the value/product, the more complicated their buying and audit process. Hint: You often need to find 'a creative way in', even if it's 'unscalable.'
    

Lastly, and often forgotten, the effort and lift to integrate and onboard the enterprise is sometimes far more costly than the tech you’re selling. Keep this in mind.