A Buyer’s look at 2009 Opportunities

There are no original-but-excessive descriptions left for the present condition of the world markets and growth projections.  Insert one that resonates with you here…

We agree with it completely.

K&R had an interesting discussion about what the 2009 recession means with a significant buyer of technology hardware, software and services.  The company provides services to their own clients, and in the course of providing those services they deal with over 1000 vendors and spend over $100 million with those vendors each and every year. We wondered what the implications of the year would be to their vendor management.

Many sellers will see extreme versions of historic buyer behavior in the coming year.  Many Buyers will choose based on price, and look for the absolute lowest pricing.  They will play one vendor against another for the short-term benefit they can get that results from Sellers’ fears.  Many will look to set multi-year agreements which “lock-in” favorable terms which can only be obtained in a highly competitive and “nervous” market.

But, not everyone will take this approach.  The Buyer we spoke with has a different vision.  These are his words.

“Our approach to vendors is different than many things — often predatory — that I see going on in the market. Our emphasis includes squaring away financials that don’t make sense based on how the relationship has evolved, but that’s only one component. Equally important is reexamining the vendors we’re doing business with, reducing the number of ‘multiples’, aligning critical ones strategically, and having them adopt [the principles which guide us with our own customers]. I want our critical vendors to become an active component of the overall value proposition.”

In our eyes, this is a highly effective strategy.  The fundamental argument we make to Sellers is that they must link their offerings to the business value of the client to improve the results of their negotiations.  Here, an important Buyer says the same thing.  Why?  Because in the end, Buyers only buy to get a job or task accomplished, not just because the price is low.  The present market provides Buyers with opportunity.  We predict that this Buyer’s organization will use that opportunity for long-term benefit, and exit it stronger than ever. Their focus on business results over negotiating tactics is superb.  (td)