Vendor Licensing Tackling the Contract and Budgeting Monster

1. Vendor LicensingTackling the Contract and Budgeting Monster By Armand Brevig Global Category Leader, Scientific & Business Information, AstraZeneca armand.brevig@astrazeneca.com Joanie Olivier Executive Partner, Iconitel Consulting Services Inc. jolivier@iconitel.com

2. Vendors seem to have the upper hand Internal customers want more for less Budgets are stretched as result of past high vendor price increases

3. How to Deliver More for Less? Excel at: • Pre – Negotiation by Armand Brevig • Being Effective at the Negotiation Tableby Joanie Olivier • Vendor Management by Armand Brevig

4. Pre - Negotiation • Corporate Strategy & Vendor Licensing • Developing Content Acquisition Vision • Developing a BATNA • Standard Terms & Conditions

5. How Information Content Contributes to AZ’s Objectives • The right content, in the right format, at the right cost will help us get from A to Z: • Faster • With fewer incidents of failure • At reduced total cost A Z

6. The Link with Corporate Strategy Corporate Strategy drives Functional Strategy Functional Strategies drive Information Centre priorities Information Centre priorities drives Information Content Acquisition

7. Example Corporate: “…growth that will place AstraZeneca among the best in the industry” R&D: “Deliver a portfolio of differentiated medicines that meet patient needs..” Increased focus on diabetes research Possible rebalancing of information content portfolio

8. Developing Information Acquisition Vision Corporate vision / strategy Key Customer vision / strategy Dissemination Unit vision / strategy Shared Information Acquisition vision Consensus of key value drivers

9. Developing Information Acquisition Vision To create a competitive advantage by driving the way AZ licenses, manages and exploitspublished information content Information content acquisition VISION Optimise resources spent on contractual work/ negotiation Demand Management, Workflow Integration & Extend reach Increase Value / Manage Costs Vendor Relationship Management VALUE DRIVERS Value for money above industry average Balanced resource allocation to maximise ROI Leverage and streamline key vendor relationships for added value Enhance decision making processes STRATEGIC OBJECTIVES

10. Staying on track Avoiding “strategic drift”… Management preferences Vision Resources Supply Market Internal Customers Organisation

11. BATNABest Alternative To a Negotiated Agreement • Pretend vendor you are planning to negotiate with does not exist – what would you then do and at what cost? • What alternatives do you think the vendor has – does s/he need your business to break into new market segment? Is s/he in financial difficulties? • What assumptions is either side making about each others BATNAs?

12. BATNABest Alternative To a Negotiated Agreement • A well explored BATNA empowers you to accept what should be accepted and reject what should be rejected  Confidence at the negotiation table

13. BATNA – Porter’s 5 ForcesLook for trends and changes Barriers to New Entrants How difficult is it to enter the market segment? Any signs of new entrants? Power of Vendors Power of Your Org Fully leveraged? Unchallenged assumptions? Fragmented vendor relationships? Industry Rivalry How powerful are they in various segments? Strong competition in sub-niches? Scope for exploiting that? Substitutes Thinking outside the box, what other solutions might there be?

14. BATNA - Example Buying eJournal back files vs.document delivery Benefit 1 Benefit 2 Benefit 3 yr2 yr3 yr1 PV(yr1+yr2+yr3) >= Purchase cost Purchase cost

15. YOUR Standard Terms & Conditions • In-house consensus of what is important • Quicker to complete contractual work – pre cleared legal language • Consistency • Less demands on in-house legal team

16. Pre Negotiation Key Points • Be clear on how you want information content to contribute to the success of your organisation • Negotiate from a position of strength by knowing your BATNA • Speed up contracting process by developing your own standard terms & conditions

17. Vendor Management • Vendor Segmentation • Business Reviews and KPIs • Vendor Relationship Management

18. Vendor Rel. Man. Zone Business Review Mtng. Zone Cost Management Zone Focusing Where it Matters HI Strategic Complexity Collaborative Opportunistic LO HI Criticality

19. Cost Management Zone HI Cancel Framework agreements Charge back Use free / low cost alternatives Value potential Spend more Pay per view Consolidate Use emotion Emerging alternatives Bargaining LO HI Ease of implementation

20. Business Review Meeting Zone • Jointly agree Key Performance Indicators (KPIs) • Consistently meassure KPIs • Jointly examine root causes for performance gaps • Agree corrective action

21. Business Review Zone: KPI Development Financial Perspective KPIs Customer Perspective Supplier Quality Perspective KPIs KPIs Communication Perspective KPIs

22. Business Review Zone: KPI Development • Good KPIs should be: • Relevant to your information acquisition strategy and vision • Difficult to manipulate but easy to generate • Mixture of output, input, and process KPIs • Limited to the KEY ones. 2-3 in each areas

23. Vendor Relationship Management (VRM) – Why Bother? • Fully exploit vendor’s capabilities • Best of breed T&Cs • Transparent relationship • Lower total costs

24. VRM Zone – Total Visibility Total Relationship AZ’s Negotiation Team Vendor’s Negotiation Team Total Spend Total Business Demand Now and future (3-5 yr plan)

25. VRM Zone – Total Relationship Framework Agreement outlining boilerplate terms Service specific contract terms Contract/Service specific boilerplates

26. dB subscription eJournals Vendor Group AZ Group Reprints Subsidiary A Subsidiary B Subsidiary A Subsidiary B Advertising Sponsorship Publishing/Editorial Board VRM Zone – Total Spend

27. Total Business Demand Planned activities w. impact on info. acquisition Marketing R&D Legal Sales IT 3 – 5 yrs.

28. Vendor Management Key Points • Focus where it matters • Work with vendors to improve performance on both sides • Leverage total business relationship to fully take advantage of vendor’s capabilities