With inflation rates at their highest level in decades, how are you approaching vendor negotiations to mitigate the impact?

We always negotiate an annual efficiency improvement rate (cost reduction) and depending on the service it’s 3% to perhaps 8%. On top of that we include out clauses with 60 days to as much as 6 month’s notice. This allows us to initiate another RFP if we need to achieve a new efficiency target (cost reduction)

We also include cost reductions if we have head count reductions over 2% but this can be very dependent on the type of service. If the service isn’t headcount related this wouldn’t be included

During challenging economic times we get very aggressive “efficiency targets “ from the CFO. You need to get very creative with vendors and insure they are aware how your company strategies change based on finances and work together on getting flexibility in your contracts

Certainly negotiating discounts, multi year contracts and bulk purchases is important in an inflationary or non-inflationary environment, however we always try to look for adding more value as the best way to negotiate contracts. You would be surprised what people will put on the table to avoid lowering their bottom line. So, whilst getting the best price is important there always tends to be a loser in the relationship so i do my very best to extract more value first.

It's important to review fine print of the contracts, terms and conditions, cost, length, coverage, options to exit, change or additions.

I'm negotiating harder than I usually do on prices, and trying to get multi-year discounts.

As I can see also try to negotiate multi year contract and one payment which saves me money. It's easy for all the systems that we have on premise, but with the cloud it's hard to know what's coming and how the provider will rise there subscription and Lecompte-Marmo models!