There has been a lot of discussion about how new technologies such as online negotiation and contract management software are changing the process of getting deals done - either from a legal, sales or procurement perspective. Most of this has focused on how it’s accelerating the process and making it more streamlined.
But how will new technology transform future negotiations in situations where companies do not want to move more quickly and for various reasons want to use various different negotiation techniques?
Some companies prefer to take a manual approach because they perceive this provides them with a strategic advantage - by “slow-rolling” the process they believe it makes it more likely they will secure a better deal.
I had a chat with Stanford Law School Professor David Johnson, an expert in negotiation practice, theory and training (https://law.stanford.edu/directory/david-johnson/), and asked him for his thoughts on how technology is changing the negotiation space. He was of the view that contract management software “is changing the way negotiation is done because policy can be more uniformly implemented across contract admins or your point person”.
He suggested this may work in different ways for different types of contracting scenarios. For example, in a situation where a company has a large volume of contracts which vary little in form, the company may value the speed at which the contracts can be processed more highly. They may use a contract management system’s tools for contract creation, contract collaboration as well as for capturing data related to sales commitments, vendor deliverables and contract managers’ performance. The key is to push through contracts quickly to maximize the speed at which business is done, but with accuracy via a data-driven operation.
However, consider a different scenario where a company has seen that over time they can obtain a better deal by taking a longer time to agree with a counterpart on price. Data analytics could assist on measuring the optimum amount of time to wait before making concessions on price. It could also calculate when to start negotiations so that agreement can be reached at the most appropriate time. Alerts could be set to guide those involved in the process to engage with the counterparty at the optimum time. Technology in this scenario would enable negotiators to be more nimble and calculated in how they interact with their opposition to achieve desired outcomes.
In a scenario where there is a large scale merger and acquisition taking place there will be many people involved in the negotiating process. All of these parties will be involved in negotiating with counterparties on different issues. Effective contract management software enables this otherwise messy process to be more controlled by capturing all the messaging and ensuring important communication between parties are not missed or degraded. Policies such as the pace at which concessions are to be made can be incorporated into all aspects of this multi-faceted negotiation process.
It will be interesting to see how applying policies and algorithms more uniformly over the negotiation process will change the outcomes and results of negotiations. Data will allow us to analyze this in the future but this won’t be accessible until more people adopt contract management software which has the features discussed here.
What are your thoughts? How do you think this new technology in the form of the new generation contract management software will change the outcomes of negotiations in the future?
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