The Difference Between Gartner & The Negotiator Guru
Gartner, at its core, is a market intelligence firm. It uses a wide-angle lens to give you a big-picture view of market and industry trends. You can use their data as general negotiation guidance and add their toolkits to your own.There is absolutely value in this broad-stroke model but it can be limiting when it comes to looking for data and resources that more specifically mirror the size and needs of your organization.
In this article, I want to outline the similarities and differences between a simple market intelligence firm approach and a niche service provider approach. There are many reasons you might want to research best practices from a 30,000-foot view as well as dive deeper at a 5,000-foot view. Many of my clients will use both Gartner’s and The Negotiator Guru’s (TNG) services to achieve the best results for their companies. The graphic below gives a basic overview of the similarities and differences between our companies and we’ll break each one down in this article.
There Are Some Similarities Between Gartner & The Negotiator Guru
Both Gartner and TNG provide information on market and industry trends as well as general guidance on IT Cost Optimization. We have each developed our own toolkits to strategically approach each client’s needs. We overlap when it comes to providing general guidance to CIO’s. Our companies also both provide rate benchmark data although, as you’ll read below, we go about this in different ways. Gartner has quite a bit of data they provide in aggregated terms which is useful but, without isolating the information by industry or annual spend or similar categories, it can be difficult for CIOs and their supporting functions to narrow down actionable intelligence that is defensible and realistic.
There Are Many Differences Between Gartner & The Negotiator Guru
The keyword I would use to describe the services Gartner and TNG have in common is ‘general.’ Gartner is a great resource for general information across a wide array of topics but rarely provides niche depth that our customers are longing to consume. In contrast, TNG has a deep and disciplined focus within the IT Software vertical which enables our team to share actionable insights that are localized, specific, and highly relevant to our clients. In fact, it was our early clients that helped shaped this disciplined focus as they made their niche needs clearly known to our team. Due to our outstanding client family, TNG has been on a journey to fill our clients’ market intelligence needs for specific supplier relationships. This has organically driven our firm to be the worldwide leader in Salesforce Contract Negotiation Advisory Services which typically is 80% of our work portfolio at any given time. With the average cost of a Gartner subscription being $30,000 per seat, plus additional consulting costs in order to receive personalized advisory services, it’s worth your while to be informed on what they can and cannot help you achieve. Because we provide specialized data and consulting services, we’re able to dig deeper into our clients’ businesses and tailor our process to better achieve the results they’re looking for. The following are a few of the specific areas The Negotiator Guru differs from Gartner in terms of what services and results we can offer our clients.
Right Size
While Gartner has a wealth of industry data and information, it can be nearly impossible for a client to look at the data and isolate a specific instance to best compare themselves to their peers. This leaves clients feeling informed but uncomfortable about how this information is applicable, and more importantly defensible, within their environment. In certain circumstances, Gartner will provide “best in class” rates for a specific digital capability or service portfolio. One would argue that this provides directionally correct price targets to use as a market intelligence within their supplier negotiation. We generally agree, however, it’s important to note that your software sales executive (or worse yet your internal colleagues) will very quickly share with you that you don’t fit the profile of those rates for XYZ reason. We know this because we’ve been in these conversations on countless occasions. In the rare case that you obtain “best in class” rate information for your specific topic of interest, you are still missing a critical piece of knowledge which we call our “Right Size” guidance. Using conservative figures, there is a 15-20% value-capture opportunity just by applying Right Size practices to your research and internal analysis before entering into any IT contract negotiation Our supplier-specific expertise is one of the biggest contributors to this Right Sizing approach. Within our Discovery Phase, we take an inventory of your current products and licenses and match them against your actual business needs. Almost always, we find that our clients are over licensed and have shelfware within their environment. This is an example of Right Sizing. From a Right Pricing standpoint, not only do we understand “best in class” rates, we localize price targets based on industry, client size, and contract value. This enables our clients to feel 100% confident about the market intelligence as we’re benchmarking their rates against that of their like size industry peers. To expand upon this difference, we’ll use our expertise in Salesforce as an example. As raised and validated by leading consulting and intelligence firms, TNG has the most comprehensive database of Salesforce rates in the world. This capability allows our team to quickly and easily perform a price benchmarking exercise for our clients. In many instances, we’ll inform prospective clients that their rates are within an acceptable margin of their “Right Price” benchmark and that the only real opportunity (if any) is to pursue “Right Sizing” inside of their environment. At TNG, our culture and client centric values direct our work and guide us to only accept prospective clients where we know with certainty there is a strong potential to drive huge impact.
Being able to combine Right Price and Right Size analysis will have a significant impact on the effectiveness of your supplier negotiation strategies.
Contract Language Risks
As a result of our deep supplier-specific expertise, our team on average analyzes 5 - 15 software contracts per day. As a result, we know what’s “normal” with all of the large enterprise software platforms and any common risks that are inserted unbeknownst to our clients. By doing this every single day, our team is easily able to identify commonly-used, ambiguous language that always favors the supplier. Large software companies know their customers rarely spend time analyzing terms and conditions within their contracts. Furthermore, the widely accepted principle of Software-as-a-Service (SaaS) leads clients to believe the terms are standard and unchangeable. Unfortunately, this simply isn’t true. As part of our Contract Execution Phase, we conduct a deep dive assessment of our client’s supplier contract as part of our standard service (another major difference from Gartner). To put the impact of this added service into context, our team identifies a unique contractual risk within SaaS contracts alone 33% of the time. If the contract we are analyzing is not a SaaS contract, contractual risks are identified, on average, 85% of the time. Knowing what to look for in each supplier’s contract language helps our clients avoid common pitfalls and supplier-centric renegotiation strategies.
Sales Playbook Coaching
Another key difference between taking a general approach on market intelligence (Gartner) vs. a software specific deep niche (TNG) is the ability to learn and leverage the sales playbook(s) for these large enterprise suppliers. It may not surprise you that within the most successful software sales organizations are repeatable and prescriptive sales playbooks that guide the near robotic actions of their sales representatives. As a result of learning these sales playbooks we are literally able to tell our clients the moves their suppliers are going to take next. This intelligence allows us to be one step ahead within the negotiation process while leveraging the interests of both parties. While the art of negotiation is an art and not a science, arming yourself with this intelligence allows you to deploy counterintelligence strategies inside of your organization (to counteract common supplier tactics such as divide and conquer) while also proactively preparing counterpoints to their foreseeable arguments. As a result, our clients commonly tell us that they were the most prepared they have ever been before, during, and after a negotiation.
Advisory and Execution Services
We don’t just tell you what is possible. We help you achieve it. The biggest criticism most companies have of typical market intelligence and/or management consulting firms is that they’ll tell you what “best in class” looks like but will leave you to figure out how to achieve it within your organization. If they do offer advisory services that help you implement their “best in class” then it will be for additional fees that eat away at the cost savings potential, etc. We’re a full, beginning-to-end provider who will help you all the way through to the execution of the contract.. At TNG, we not only share a “best in class” picture but also create a realistic future state localized for your business. We help you implement that future state while also limiting risks to your organization long after our engagement ends. This is all part of our standard duty of care for our clients.
4-Step Negotiation Process
Our proprietary 4-step negotiation process allows us to deliver a clear and consistent service to our clients. In the interest of brevity we won’t go into detail of what each step entails, however, please know that within the Discovery and Strategy steps you will walk away with a forward looking roadmap as part of the overall engagement. If even offered, this would be an extra advisory fee from Gartner and/or any other market intelligence and/or management consulting firm. The graphic below quickly outlines our negotiation process:
Compensation & Fees
Our compensation for these services is also entirely different from Gartner’s method. As mentioned above, Gartner’s average subscription rate is $30,000 per person plus any additional consulting fees. With this package, you have access to their standard publications, toolkits, and potentially a limited number of “analyst calls” which are quick conversations with the author of the publications. Any additional advisory assistance, if even possible, comes as an upcharge. Even with this additional cost, you will be on your own from an execution standpoint.
We charge either an Advisory Fee based on annual contract value or we offer a Pay Per Performance option with a simple baseline calculation. We don’t charge based on a subscription service to our articles, we provide all this information for free. Our rates contain no hidden charges or surprise upsells. On top of that, we’ll help you execute the strategies we develop with you. We’re incredibly transparent with how we price our services and our clients never question the value they achieved from engaging with TNG.
Combining a Broad Overview Approach with a Specialized, Niche Consulting Firm is a Winning Equation
One of the questions we hear frequently is whether someone can/should work with both Gartner AND The Negotiator Guru. The answer is yes! Gartner provides a lot of good, general information. TNG helps you zoom in on the information that is most relevant to your organization so you can determine which key findings are critical for driving cost savings/avoidance while lowering your contractual risk. Gartner is a market intelligence research firm that has a very limited advisory component separate from their articles. They do not generally provide execution services. TNG provides information without a subscription fee and our advisory and execution services are provided in the same package. Bringing in TNG to help you pinpoint your specific needs, value capture opportunities, and execution strategies will provide immediate and long-term intrinsic value for your organization. Remember, TNG will only accept you as a client if there is clear and distinct net positive impact potential… well, we can’t speak for the other guys.
More resources
From Fortune 500 giants to fast-growing innovators, TNG has helped clients save 20% – 40%+ on enterprise software contracts — even when they thought it was impossible
Inc. Magazine Unveils Its First-Ever List of the Midwest’s Fastest-Growing Private Companies— The Inc. 5000 Series: Midwest
The Negotiator Guru Ranks No. 15 on the inaugural 2020 Inc. 5000 Series: Midwest
NEW YORK, March 25, 2020 – Inc. magazine today revealed that The Negotiator Guru is No.15 on its inaugural Inc. 5000 Series: Midwest list, the most prestigious ranking of the fastest-growing private companies in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
Born of the annual Inc. 5000 franchise, this regional list represents a unique look at the most successful companies within the Midwest economy’s most dynamic segment—its independent small businesses.
“We’re honored to be recognized in the Inc. 5000 list as one of the fastest growing private companies in the Midwest,” said Dan Kelly, Founder and Senior Partner. The Negotiator Guru also ranked #2 in the state of Minnesota and #5 in the category of Business Products and Services. “Our success is a direct result of the value we’ve delivered with, and for, our global enterprise client base. Congratulations to the TNG team!”
The companies on this list show stunning rates of growth across all industries in the 12 Midwest states. Between 2016 and 2018, these 250 private companies had an average growth rate of 360 percent and, in 2018 alone, they employed more than 27,000 people and added $13 billion to the Midwest’s economy. Companies based in the Chicago, Detroit, and Cincinnati areas brought in the highest revenue overall. Complete results of the Inc. 5000 Series: Midwest, including company profiles and an interactive database that can be sorted by industry, metro area, and other criteria, can be found here starting March 25, 2020.
“The companies on this list demonstrate just how much the small-business sector impacts the economies of each Midwest state,” says Inc. editor in chief Scott Omelianuk. “Across every single industry, these businesses have posted revenue and growth rates that are beyond impressive, further proving the tenacity of their founders and CEOs.”
About The Negotiator Guru
The Negotiator Guru is the leading advisory firm for Salesforce contract negotiation. Our team of Senior IT Sourcing Experts provides industry leading IT contract negotiation services for a global client base. Clients engage us to source, negotiate, and manage highly complex IT contracts, transactions and suppliers. Through our deep business understanding and senior expert negotiation skills, we work closely with clients to deliver immediate and long-lasting financial impact to all stakeholders.
Founded in 2015, The Negotiator Guru is a private company based in Minneapolis, Minnesota. For more information, visit www.thenegotiator.guru. More about Inc. and the Inc.
5000 Regional Series
Methodology
The 2020 Inc. 5000 Regional Series is ranked according to percentage revenue growth when comparing 2016 and 2018. To qualify, companies must have been founded and generating revenue by March 31, 2016. They had to be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2018. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2016 is $100,000; the minimum for 2018 is $1 million. As always, Inc. reserves the right to decline applicants for subjective reasons.
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About Inc. Media
The world’s most trusted business-media brand, Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50 million people each month across a variety of channels including websites, newsletters, social media, podcasts, and print. Its prestigious Inc. 5000 list, produced every year since 1982, analyzes company data to recognize the fastest-growing privately held businesses in the United States. The global recognition that comes with inclusion in the 5000 gives the founders of the best businesses an opportunity to engage with an exclusive community of their peers, and the credibility that helps them drive sales and recruit talent. The associated Inc. 5000 Conference is part of a highly acclaimed portfolio of bespoke events produced by Inc. For more information, visit www.inc.com.
Why are Companies Hesitant to Engage Outside Consultants?
Why is it that companies are sometimes resistant to engaging with a cost savings firm like The Negotiator Guru (TNG)? Furthermore, why is it that a company refuses to engage with an advisory firm (like TNG) after they know there is a guaranteed ROI? Is there any rational reason for this or is it purely an emotional response?We at TNG find ourselves asking these questions far too often…
We know humans can be complicated (😊), but we wanted to dig deeper into what sometimes appears to be irrational behavior that negates shareholder value creation opportunities. As a result, we conducted ethnographic research on the cause of this behavior with the intent of identifying key trends, by persona. Here are a few of the key insights we discovered:
- IT Leadership (CIO, VP of IT, etc.) fears they will hurt the relationship with the software publisher/service provider leading to service degradation.
- Purchasing/Procurement/Sourcing representatives have huge egos and thrive on taking credit internally. Furthermore, they are worried about their job security if someone else can achieve a greater result.
- CFOs think they only way to achieve such savings is by changing vendors (ex: Salesforce to Microsoft) or by cutting products/services.
- Business leadership think it will take too much time to achieve the prospective savings which will negate the realized ROI.
- Executives at publicly traded companies are generally risk adverse and think it’s safer to use a big 4 consulting firm (that’s already “in the system”) even though they will likely cost more and achieve much less (since they’re a generalist vs. specialist).
We’ve heard different variations of these key objections for years. What makes us most proud is that some of this feedback came from a few of our past clientele who decided to overcome their natural resistance as they knew what was best for their organization. Per the recommendation of these past customer respondents, we've outlined what they experienced (vs. initial perceived resistance):
- Vendor Relationship – While it may be slightly uncomfortable at the beginning (depending on how much Right Sizing and/or Right Pricing opportunities TNG identifies), the vendor relationship and service quality improves at the conclusion of the TNG engagement. The vendor is engaged with the customer in a strategic manner and the customer can now feel confident they are only paying for what they need at a fair price.
- Procurement Job Security – TNG acts like a force multiplier for existing Procurement teams. As such, TNG simply seeks to enable high impact results vs. seek credit.
- Vendor/Product Change – Vendor changes are extremely rare. TNG simply identifies how internal stakeholders use the respective software platform (via their proprietary persona analysis) and identifies cost savings opportunities without sacrificing functionality/service quality.
- Time/Cost to Achieve – Internal business stakeholders are rarely involved in the process after the Discovery phase is complete.
- Niche vs. Generalist – The speed and consistency in which TNG can delivery results is a direct result of their focus and dedication focusing on their core competency, such as Salesforce.
Interestingly, our analysis identified the following key insights regarding business leaders' intention for engaging an outside advisory firm (summarized for brevity):
- IT Leadership sometimes feel uncomfortable being the “tough voice,” so they hire a 3rd party who brings the credentials to speak from an authoritative position.
- C-Suite Executives simply want to motivate (prove to) their Procurement/Business Teams that the “great deal on the table” is not so great after all.
- Procurement leadership wants to be armed with accurate price benchmarking or contract term knowledge. They recognize they can’t be experts in everything and value niche expertise from specialists vs. generalists.
- Board members want to do anything possible to reinforce their fiduciary duty to their shareholders…this includes identifying, and executing on, every available cost savings opportunity.
- Contract negotiators want to understand the software publisher’s sales playbook and internal incentive process…not just general market intelligence.
We hope that you find these key insights helpful as you contemplate and reflect on your own personal resistance to engaging an outside advisory firm. TNG prides itself to make every engagement as risk-free as possible for our clients. Furthermore, TNG will only accept a client if we know there is a major impact opportunity…if not, we will simply give you some free advice. Ready to explore joining the TNG family? Contact us today to set-up a client intake assessment where we identify your cost savings opportunity for free!
Why Salesforce Commerce Cloud Negotiations are Different
What is Commerce Cloud
The Salesforce Commerce Cloud is one of the fastest growing segments within the Salesforce ecosystem of products and services. The Commerce Cloud provides an enterprise grade e-commerce solution that which is a direct competitor to e-commerce heavyweights including, but not limited to; Shopify, Magento (Adobe), SAP, Oracle, just to name a few.
Since about 2018, Salesforce has highlighted the e-commerce cloud as a strategic growth channel for its existing customers. In other words, Salesforce has focused on deploying their “land and expand” sales strategies to deploy the e-commerce platform amongst its Sales and Service Cloud customers. There are clearly significant customer experience opportunities that can be enabled when e-commerce is connected directly to your CRM. Ironically, the TNG team is engaged by both new and existing Salesforce customers to assist with commercial negotiations related to the on-ramp and off-ramp of Commerce Cloud. Our clients seem to either love or hate the Salesforce Commerce Cloud depending on their specific use case. No matter where you land on the love/hate spectrum, it’s important to understand key negotiation opportunities/risks that are specific to the Salesforce Commerce Cloud.
History of SF Commerce Cloud
Salesforce acquired Demandware on June 1st, 2016 for $2.8 Billion USD. Some say that Salesforce was “forced” into the acquisition based on a synergistic customer portfolio (with Demandware), a lackluster homegrown solution filled with development challenges, and a competitor landscape (including Oracle, Adobe, etc.) who were making significant strides in the space.
In our opinion, Salesforce acquired Demandware primarily to purchase a pre-existing retail customer base that can be cross-sold Salesforce native functionality like Sales and Service Cloud. Salesforce had historically been lacking both North American and European retail customer penetration so this allowed an easy on-ramp. Fast forward to 2021 and Salesforce is still lagging (compared to their normal market penetration) in retail customer acquisition globally. Furthermore, we have seen many legacy Demandware customers transition away from the Salesforce Commerce Cloud and migrate over to easier-to-use platforms like Shopify. Having the e-commerce competitive landscape in mind is important when exploring/negotiation a commercial relationship with Salesforce either as a new or existing customer.
Why these negotiations are different
Salesforce typically organizes their sales team by industry, region, and product line (cloud). Their sales team incentives are consistently changing but are largely established by industry and product line. Furthermore, customer pricing is influenced based on industry, annual contract value, and customer revenue. To be most effective at any commercial negotiation it’s important to have as much data as possible. This includes identifying the supplier’s interests and best-in-class rates on a product-by-product basis based on your unique footprint. We call this our Right Price Benchmarking service which is included as part of our Full Negotiation Service or also offered as a standalone product for those that just want the data. Salesforce, and for that matter all e-commerce solution providers, are fully aware that switching costs from one e-commerce platform to another is an undesirable expense. They know that once they get you onto their platform that you will need to be really upset to create a reason to leave. The fact of the matter is that plenty of customers do leave Salesforce’s Commerce Cloud for one or multiple reasons. Our research, and real client experiences, have identified one consistent trend amongst those looking to leave: Out of control run costs. No matter whether you’re a new or existing customer to Salesforce it’s important to be as prepared as possible when engaging Salesforce. Take a look at the section below for some key insights specifically related to negotiating a Salesforce Commerce Cloud contract.
Key Insights/Tips
Now that you understand the history and key motivations related to Salesforce’s Commerce Cloud you should be able to apply the below key insights most effectively.
- Salesforce is heavily focused on capture net new retail customers. Your Salesforce sales team is heavily incentivized to find and convert customers on existing e-commerce platforms.
- If you are a current Salesforce customer and exploring the Commerce Cloud, be focused on “lift and shift” credits from Salesforce that help mitigate any change costs. Depending on your situation, you can negotiate credits to be applied immediately, over the contract term, via discounts on other products, etc.
- It’s very important you conduct a thorough assessment of your options and the overall total cost of ownership impact of your potential options. For example, a one-time credit on the Commerce Cloud license fees may produce far lass benefit to your organization than a % discount on your existing license footprint with Salesforce.
- It’s important to understand who has decision-making authority inside of Salesforce. It largely depends on what you’re asking for, the overall relationship impact, and the attractiveness of you the customer. The only way to successful navigate the Salesforce ecosystem is to hire a firm that deals with Salesforce everyday and has ex-Salesforce employees (excuse the shameful TNG plug).
- Literally 90% of current Salesforce customers that engage TNG are paying for more digital capability than they need. Those same customers are also overpaying for licenses that that they don’t even need. It’s very important you conduct a Right Sizing assessment to ensure you’re only procuring what you need.
- Specific to Commerce Cloud, this includes forecasting your Gross Merchandise Value (GMV) projections for each contract year.
- Similar to the above point, our research empirically proved that 100% of our customers (no matter new or existing Salesforce customers) have committed to higher revenue targets than needed in the interest of “getting the best deal” without TNG support;
- This creates a material risk to the Salesforce customer when they don’t hit those targets.
- Generally speaking, a longer contract term will drive a lower GMV price point;
- Even if you feel very confident in your GMV projections, focus on usage and price-point flexibility within your Commerce Cloud contract to eliminate surprises and capture cost savings if revenue actuals exceed projections.
- Note: If you are in an industry that is undergoing significant industry consolidation (M&A activity) then you should provide yourself the flexibility to acquire and/or divest mid-contract with Salesforce.
Negotiating with Salesforce is more of an art than a science. It’s important that you understand all of the facts before negotiating with Salesforce. Please feel free to contact us for some additional helpful tips as you start to explore the Salesforce Commerce Cloud. (And yes, we’re happy to help even if you’re in the 19th hour of negotiations 😊)
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Upload your contract data or schedule a discovery call. If we can’t identify at least a 10%+ from a TNG Right Pricing™ opportunity, we won’t take your money (but we will offer you some free advice!)
