A recent agreement between these two companies yields a simple of example of the different values often seen by the two “sides” in a negotiation.
LogicaCMG is a European IT and business services company. Dovetail is a provider of payments systems. They recently announced that LogicaCMG has acquired a “master license” to Dovetail’s payment systems technology. The details are not important to us, except that they provide a window on motivations, and how the motivations of two sides to a negotiation are almost always different.
At the core, most sellers get their business value from money. Most buyers are using the purchased technology or service to solve a business problem, which in turn leads to value. The accomplishment that the technology enables provides the value – the technology itself does not. In that way, the connection between business value is shorter and clearer for sellers than for buyers. But most negotiations in IT end up with the seller describing the buyer’s future value. It can be a difficult connection to make, but it is the most effective persuasive approach to convincing a buyer that what you offer drives value to them. In fact, many sellers stop short of making this linkage of their offering to business value for the buyer. For those sellers, they can expect a longer sell cycle, and a more difficult time sustaining price and terms in the agreement.
The press release from LogicaCMG makes a short value statement for each side.
First: Sarah Loveday, Director, Global Products of LogicaCMG, said, “We will develop our own variations to the core system that help us enhance our market-leading packaged solutions in response to the challenges facing our clients.” This statement of value is indirect. The implied value is that being responsive to clients will provide a return in market share, revenue, or customer satisfaction – something that is valuable in turn to LogicaCMG. Valuable, but the purchase of the technology only enables the value – it does not provide the value.
Second: Martin Coen, Dovetail CEO, comments, “This validation of what we offer is the result of several years of intensive review by LogicaCMG, and confirms our belief that we have taken a significant step ahead of our competitors in delivering next generation payment systems.” There are two values here. (The following are not actual quotations, but things that might be said – in quotation marks for emphasis.) One is not stated. “We got paid for this technology”. (Although, in fact, depending on the value of the second type, even that may not be true.) The second is a value of a different sort. It translates to something like this, “My technology is validated by a key and credible client. That makes my solutions more credible and attractive in the market, and raises the odds that others will also see my technology favorably.” Which, of course leads to more chances to say, “we got paid for this technology.”
When you negotiate, as a buyer or a seller, remember this lesson. Value drives decisions, and the value to you is not the same as the value to “them”. You have to understand both.