Rocky Start Means Rocky Road (Contract Process Red Flags)
During any system selection or vendor selection process, you will inevitably be dealing with some sort of contract negotiations. This may include negotiating master agreements, detailed statements of work, and for systems, project planning.
Do not ignore the red flags during the contract process. No matter how far into the process you are. If you haven’t signed the agreement(s), you can change your mind. The perceived delays associated with identifying a different vendor will be worth it in avoiding what can be very expensive (and painful) issues.
It will always be more costly and painful to keep going than to stop and reassess.
Last year I worked with a client to select an implementation partner for a well known ERP system. We did all the right things in terms of checking references, planning out the project, and getting the details into a statement of work. And the project still went sideways.
We ignored the warning signs.
We explored options at one point but the client was so concerned about missing the required Go Live date that we kept moving forward.
What were the warning signs or red flags?
After agreeing to the terms of the agreements, the vendor made revisions and sent for electronic signature without notifying us of the changes. This was after we’d agreed to all of the edits and we were going through the formality of signing. This is a major no-no that has led to some serious litigation in the past.
We should have stopped here.
The sales folks explained that they’d been having some issues with their contract group and assured us that it was an accident and would not happen again.
Those changes introduced language we’d already removed from the agreements and led to several more weeks of discussions and negotiations.
We started the project (on time) without agreements as we worked through the details. The sales folks assured us they were confident we could get to a mutually agreeable place quickly.
We met the project team mid August to prepare for a kick off on August 25th or 26th. During the call, as we walked through the project plan and details, the lead consultant said they unfamiliar with what was detailed in the statement of work and that it wasn’t how they did things. And she said she wasn’t going to deliver them.
We really should have stopped here.
Once again, we were assured by the sales team, including the engagement partner, that everything would be fine. It wasn’t. The consultant did not care about what was defined in the statement of work and was a serious problem throughout the project.
We were promised their top consultants with experience in life sciences. After reviewing the CVs and LinkedIn profiles for the vendor implementation team, none had the experience we were promised. When challenged, we were told this was all they had.
We really, really should have stopped here.
We were 6–8 weeks into the project before the contracts were signed. We could (and should) have stopped and gone with other resources. I even had an alternate team lined up by the first week of September.
After one of the worst implementations I’ve ever experienced, many more dollars spent by my client on my time to keep the project on track, we barely made it live on time, only after narrowing the scope for 1/1 and deferring functionality until the first month end close and then the first quarter close.
It was brutal. I almost left consulting.
In all fairness to my client (and to me), the vendor lied throughout the sales cycle and project. We were gaslit over and over again in ways neither of us had ever experienced.
We knew it could be difficult but we didn’t know it could be this bad. We honestly did not know it could get worse, and each time we said that, it did.
While this may be an extreme case, I’ve learned in my seventeen (17) years of experience that the more difficult the contract process is with potential/new clients, the more difficult the relationship.
I had one potential client about twelve or thirteen years ago want me to do some work. We worked through my master services agreement for several months. I had to get my attorney involved which rarely happens. After about $1,000 in legal fees (my side) and counteless hours of negotiations, we eventually got the MSA and statement of work signed. And then the client chose not to do the project.
I should have learned my lesson.
Fast forward about ten years and another group within that same company wanted me to consult for them. I’d worked with the main point of contact at previous companies and looked forward to working with him again despite my experience at his new company.
We started the contract process all over again, even the MSA. Their template and requirements had changed along with their legal group. And the process took forever.
Once we got the master agreement and statement of signed, I started working with the client and from day one, it was a nightmare.
They couldn’t make decisions. They kept changing what they wanted. Their team kept changing. They had internal delays. It was nearly impossible to make any progress and I had to extend the statement of work a few times because of them.
I get it. This happens sometimes. Priorities change. But this seemed to be the way they operated which made it very difficult to be successful.
The project was taking so long that there was an internal restucturing which meant a different client group took control over the project. They decided to take it on internally and I was no longer necessary. End of contract.
It wasn’t me. I later learned that the project continued to be delayed and they were hoping to have it done within another year. This should have been a four month selection and six month implementation. I’m not sure if they are live yet with the software solution they’d kicked out of the selection process before I came on board.
These are just two examples of the issues I’ve encountered over the years, not just in my consulting, but previously when I worked in biotech companies.
The contract process is a fantastic indicator of what the working relationship will be like after you’ve all signed on the dotted lines.
Pay attention. If something doesn’t feel right, take a step back and assess. Sometimes taking a pause and changing direction is the fastest and most effective way to get to your desired endpoint.