January 6, 2010
Software vendors like to claim that their sales proposals are highly confidential, For Your Eyes Only or even, if you prefer the Coen brothers to Bond, Burn After Reading. I help dozens of clients every year with software negotiations, but I cant do that unless they share with me the vendor’s proposal, including price details and contract terms. Many clients are reluctant to do this, worried that doing this might break confidentiality clauses in their agreement. One said only yesterday, “our in house attorneys have told me that I can’t discuss price or contract details with anyone other than company employees”. Unfortunately, I can’t help clients that adopt this stance. Can’t, and won’t, because I don’t believe its fair to the clients who do share to use their data to help those that don’t. So how do we resolve this impasse?
Well, with a strong IANAL caveat, I think the in-house guys are either mistaken, or they were negligent to sign a contract that included such a severe gagging clause. In my experience, all reputable vendors allow customers to get independent advice from third parties such as external counsel and industry analysts. Here’s typical language from one of the biggies: “we each agree to disclose confidential information only to those employees or agents who are required to protect it against unauthorized disclosure”. That means you can disclose it to me, because I’m acting as your agent, and I’m bound by the NDA that Forrester has with its clients. Simples! 1
Its right to consider this issue, but check your agreement. In most cases it will have similar language to the above example. If in doubt, ask the software company for permission. It would be outrageous for a vendor to withhold it, in effect to forbid you from discussing its proposal with an external counsel or showing it to an external auditor, and Forrester falls within the same advisor category. Tell me if anyone tries it on, and I’ll persuade them of the error of their ways!
In fact I’d go further. I believe customers should be able to discuss their deal with anyone they please. What is really so confidential, from the vendor’s point of view, about the discount and terms it gave to its customer? It isn’t really, its just that they are worried about having to explain to some customers why they got worse discounts than their peers. Too bad. In most cases, there are genuine, valid reasons why the deals are different – strategic importance of the deal, additional competition, different user profile, etc. In the remainder, well perhaps the customer has a right to know that it was overcharged.
End note 1. Non-UK readers will have to view this clip to understand this term: Compare The Meerkat