9 months ago

Financial service industry: Importance of a technology procurement negotiator

Illustrative image — Collected
Illustrative image — Collected

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In today's rapidly evolving financial services industry, the art of negotiation has taken on a whole new level of complexity, especially in technology procurement. As technology continues to redefine traditional financial models, organisations must adeptly navigate the procurement process to stay competitive. Successful negotiations in this context demand a unique blend of skills, including a deep understanding of digital disruption, technology, and the intricate technological landscape of the organisation and the industry ecosystem. However, it's about more than just being a tech expert; the negotiator should not be expected to adopt the role of a technology lead but must keep abreast the overall goals, aspirations, development, and business intents behind every such procurement.

Every technological investment nowadays becomes a strategic procurement for an organisation because of its significant cost and impact on the business. It's about having the right intelligence level to comprehend the functional aspects of the product, its usage, and the ability to rapidly adapt by harnessing in-house specialists and internet resources. This article delves into these crucial elements of effective negotiation, emphasising that organisations' significant technological investments necessitate savvy negotiators to discover the fairest prices and ensure the best value for their money.

UNDERSTANDING THE DIGITAL DISRUPTION: Digital disruption is a powerful force shaping the financial services industry. From the emergence of innovative fintech startups to the transformative potential of blockchain technology, the landscape is in constant flux. Negotiators must acknowledge this disruption and embrace it as an opportunity. Understanding digital transformation equips negotiators to identify how cutting-edge solutions can drive business growth and enhance competitiveness.

Grasping the very ideology behind the digitalisation drive of the organisation as an enabler for business and maintaining relevance in the market as a core spirit of a negotiation process is instrumental for a negotiator in the era of digital disruption.

INTELLIGENCE OVER TECHNICAL EXPERTISE: While technology is at the forefront of financial innovation, a procurement negotiator need not necessarily be a tech guru. Instead, they should possess the right level of intelligence to grasp the functional aspects of the products they seek to procure. This intelligence enables them to understand the product's role, functionality, and how it aligns with organisational goals. Moreover, it facilitates them to rapidly acquire the necessary knowledge by leveraging in-house specialists and internet resources. Every financial institution boasts a unique technological landscape shaped by its history, adopted culture, goals, and constraints. Effective negotiators must have a thorough knowledge of the functional aspects of all these elements and should be able to meticulously map this terrain, identifying existing technology assets, gaps, and opportunities. This in-depth knowledge empowers negotiators to align their technology procurement strategy with organisational objectives, ensuring compatibility with the current infrastructure. Beyond the confines of their organisations, negotiators must be acutely aware of the broader industry ecosystem. This awareness includes understanding the competitive landscape, regulatory changes, and emerging trends. Being attuned to these external factors enables negotiators to anticipate challenges, spot opportunities, and make informed decisions that benefit their organisations.

HIGH STAKES OF TECHNOLOGY INVESTMENTS: In today's business landscape, organisations are investing substantial resources in technology. Failure to conduct effective negotiations can lead to significant financial losses. Procurement negotiations are a crucial battleground where organisations must secure the best possible value for their investments. This aspect should be addressed or treated with the seriousness it deserves. In an effective negotiation for technology acquisition, factors such as compatibility and integration risk, migration, performance risk, security and data breach risk, obsolescence, sustainability, scope creep, post-sales service etc, are to be considered.

Effective negotiators recognise that technology procurement is not just a transaction but an opportunity to shape the organisation's future. They are skilled at discovering the most equitable prices and ensuring that the technology procured provides exceptional value for the money spent. This is a strategic imperative at a time when maximizing returns on investments is paramount.

NEGOTIATION LEAD-SKILLS, PERSONALITY AND WORLDVIEW: Negotiators in the realm of technology procurement must possess not only intelligence but also a pleasant yet convincing personality. Building rapport and trust with vendors, who often come from diverse backgrounds and countries, is paramount. Bilingual proficiency, social skills, cultural awareness, and a sharp sense of political correctness are invaluable assets in bridging gaps, earning mutual respect, and facilitating successful negotiations. We negotiate with human beings. Therefore, empathising with the counterpart's ego, sentiment, emotions and values may make or break a successful deal.

In a globalised world, negotiators must possess a globalised worldview. This perspective enables them to psychoanalyse vendors, understand their motivations, and tailor their negotiation strategies accordingly. It's not just about closing deals but also about building lasting partnerships that transcend borders. The role of the negotiator extends beyond external dealings; it also involves managing internal stakeholders. A negotiator with a pleasant yet convincing personality instils confidence in decision-making processes. Their ability to communicate effectively and convey the value of technology procurement choices to internal teams is indispensable.

REFLECTING ON THE BIGGER PICTURE: The essence of negotiation reaches beyond financial benefits. While securing a favourable financial deal is essential, astute negotiators understand that the procurement journey encompasses much more. Leveraging vendors' capabilities, securing added value, and aligning technology acquisitions with organisational objectives are essential to a successful negotiation strategy. In this ever-evolving ecosystem, it's not merely about what you gain in monetary terms but how you strategically procure what propels your organisation forward. Most effective negotiators can always derive some values for the organisation-- even when there seems to be no leverage, they can come up with one.

SYNC WITH PROJECT: The financial services industry is undergoing a profound transformation driven by technology. In this dynamic landscape, the role of the negotiator in technology procurement has never been more critical. It requires a unique blend of intelligence, adaptability, and negotiation prowess to navigate the complexities of digital disruption. Organisations investing heavily in technology must recognise that effective negotiation is the key to achieving the best value for their investments.

In this context, the procurement lead is a negotiator and a strategic partner-- driving innovation and securing the organisation's future. Embracing the importance of these negotiators is a crucial step in ensuring that financial institutions thrive in the ever-evolving world of technology. Their bilingual proficiency, social skills, cultural awareness, and globalised worldview enhance their ability to build bridges within and beyond the organisation, ultimately contributing to its success in the global tech-driven landscape.

Mohammad Aminul Hoque Sarwar is a supply chain professional and currently working as the head of procurement of a leading bank in Bangladesh.

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