Sales and Procurement- A relationship rethought
Sales and procurement have commonly been understood as opposites. Procurement are concerned with getting the lowest possible price for a product or service, and sales are concerned with getting the highest possible price for a product or service. But it’s not that simple anymore. In the new world of software purchasing, value recognition is not just focused on price- and there’s a ‘learning space’ between the two functions that can lead to win/win situations for both sellers and procurement.
There’s great merit in learning to work more collaboratively- where once simply acquiring the lowest price was enough to indicate that purchasing had done its job well, now the judgment has shifted to procurements ability to select strategic partners who can help solve the company’s most pressing business problems and help them take advantage of their best opportunities. Purchasing is now soundly in the value creation business. As this change occurs, both sales and purchasing need to rethink their relationship.
Put the Customer First
Procurement has traditionally been viewed as a purely back office function whereas in reality, it is one of the few departments that needs to be outward-facing too. Procurement controls the supply chain, which fundamentally is the business’ means of delivering its products and services to its customers- in the case of software purchasing, it’s critical.
Because the software stack for a fast-growth company is so important, savvy sales people can run rings around procurement- particularly if they’re solving a real business need. Sales understand that software purchasing is dependent on many different factors, such as security, scalabilty, language, integration and internal buy-in. As procurement has traditionally been concerned with commodity management, it can be a mind-shift to consider the many thousands of requirements of enterprise software.
Procurement can really create value by taking the time to understand the customer and the business requirements of the software purchase- beyond price. Working with sales people early in the process with the buyer, such as internal marketing or sales teams, means procurement can support due diligence, avoiding ‘shiny object syndrome’ and functional fit. Utilising their strategic relationship skills, procurement can define mutual success, and make finances live’s easier by understanding the ROI and investment value.
Speak the same language
In order to buy and renew software efficiently, the buyer and salesperson need to speak the same language. In an ideal world, the modern procurement function has a background in SaaS sales, and understands the complexity and impact of the right or wrong software stack. Procurement can take the lead in beginning to see salespeople as trusted advisors with useful insight into the space. Salespeople are at the front line in the industry every day, so they can keep purchasing up to date on trends and news.
Investing in teams with experience, or training existing purchasing teams, in cloud computing/SaaS can pay huge dividends for value creation- not only price, but being seen as a strategic partner, reducing administrative workload, and getting a better deal, faster. Together, purchasing and vendors can agree on a plan for implementation, usage and what success will look like. This will ensure that you are buying something that solves a real business problem. It will also make it clear to the vendor how they can help you, and solidify the strategic relationship.
Lead with curiosity
In order to reach better outcomes, buyers should lead with curiosity with the salesperson. Understanding the product fit, the company, and the value of the solution in a fast paced SaaS world builds relationships, and using their negotiation experience, buyers can uncover things of value to ‘add to the pie’ in negotiation. Examples include upfront payments (particularly useful for start ups in the fast moving technology space), multi-year agreements, or marketing such as references, testimonials and case studies.
It is the duty of purchasing to be skeptical, but instead adopting a more curiosity approach to understand the value and anticipation around the business of the new software purchase- or the level of reliability teams have on it if it’s a renewal. Get to know the potential partnership that can be had between two businesses instead of a transactional sale.
This might seem obvious, but being direct with a salesperson goes a long way. In fact, they will appreciate the candid feedback and the knowledge will allow them to work towards solutions. For example, if the total cost of the contract has been flagged as too expensive by the finance team, say it. If multi-year deals are a deal-breaker, that’s ok. The more information that you give the salesperson, the better they can prepared to solve your challenges. Reframing the purchase as having the potential for mutual gain can help. In fact, to really elevate the impact of procurement, professionals can treat external software sales people as their customers- procurement are there to help the sales person navigate the due diligence and internal process to drive towards a win/win scenario.
Never underestimate the value of relationships in business. People prefer to do business with people they know and trust. In fact, people are 6 times more likely to do business with someone they like. Where possible, procurement professionals should forge industry relationships before the need for a purchase comes up, instead developing a deep understanding of how external software is part of the company roadmap. Utilising these relationships can help procurement spot future trends and ensure better relationship when it does come to crunch time. Sales and procurement can then work together to define mutual success and future requirements. Understanding the people and value propositions of various vendors can help them to bring you innovative solutions and more value to your business.
In conclusion, rethinking the relationship procurement has with software sales people can lead to win/win outcomes, where they can both be the hero in the story as the product drives great value. Sales people need to change their mindset about avoiding procurement, and procurement can make significant steps to pre-empt issues by building relationships, understanding the strategy of the business and being involved early. The relationship between sales and procurement may vary depending on the organization, industry, and the personalities of the individuals involved, but moving towards more of a collaborative relationship can be a significant competitive edge for individuals and organizations alike.
(This article was written for vendr.co)