Managing Suppliers: The Industry View
Information technology negotiator Nick Traboulay lifts the curtain on how companies qualify suppliers, make deals, gather market intelligence, and get inside the heads of sales reps.
Nick Traboulay likes fast-moving environments, fast deals, thinking fast on his feet, and turning on a dime when circumstances change. The need for speed serves him well as a surfer. Waves are dynamic. Getting up on the board and staying up on a wave takes innumerable micro adjustments in milliseconds.
Being an adrenaline junkie also has served him well as a professional enterprise information technology negotiator for large organizations. He likes closing deals quickly and how IT, unlike large equipment, can be delivered and up and running in months, not years, for his company.
Ironically, given his addiction to alacrity, Traboulay is a careful buyer. He is a student of sales representatives’ tactics. He is a sponge for information about the companies he buys from. He pores over news about them, buttonholes their former and current employees, hoovers up their financial information, and makes friends with their sales reps to learn how they are incentivized and how their firms work. Whatever it takes to get to a win-win deal.
Though the companies where he has worked all sell to the government, his way of buying for them looks very different from government contracting.
He found his way into contracts while avoiding math classes in college. Having failed chemistry in his first quarter, Traboulay switched majors to business marketing. He found himself fascinated by business law cases. He couldn’t shake his thirst for more even while teaching English and surfing in Micronesia after graduation.
As you’ll read, he ended up in graduate school studying finance and government contract law with the same professor with whom he had taken business law. Graduate degree in hand, he started at Lockheed Martin as a contracts negotiator associate, tested a yen for the sky at Parker Aerospace, then returned to Lockheed Martin as a Senior Global Supply Chain Procurement Engineer after finding aerospace manufacturing too slow for his taste.
He served a short stint in category management for AECOM, and then got to do hundreds of deals in record time standing up Peraton, formerly Harris Corporation Government Services. In 2019, he joined Leidos, first managing strategic supplier relationships, and, since 2021, working as a Senior Procurement Systems Transformation Principal.
In June, he talked with Editor in Chief Anne Laurent about surfing and the art of deal-making, how companies seek and qualify suppliers, what IT sales representatives do to close deals, and more. The interview was edited for clarity and brevity.
Anne Laurent (AL): You’ve done a lot of supplier management; what does that entail in industry? How do companies choose suppliers and manage relationships with them? When does a big company care about how it ranks as a customer to a supplier?
Nick Traboulay (NT): It has been different at each company where I have worked based on the leadership’s short-term and long-term strategic objectives. It also changes with different product categories and service categories, but we often start with an analysis of the supplier base to sort suppliers by transaction volume, annual spend, and impact on business operations. From there, we identify which products and services categories each supplier supports, and rank the importance of each category to business operations.
Then, we look to map which parts of the company are affected by each supplier and determine what type of relationship we currently have with the supplier. We determine which suppliers are open to deeper collaboration versus simple transactional relationships. We also note which suppliers have long-term history with our company and customers.
We also ask how easy it would be to replace a supplier. On the surface it might seem that a supplier selling a commodity with plenty of competition can be easily replaced with another supplier selling that same commodity, but it isn’t necessarily that simple. Not all suppliers are equal. I want to build relationships with suppliers that are willing to go over and above to help our company meet our strategic objectives and provide value above and beyond the financial transaction.
The best suppliers consistently bring creative ideas to the table, keep us informed of changing trends, seek opportunities to collaborate with us and create new solutions together. They share perspectives from their customers in other industries, such as hardware stores, restaurants, banking, luxury goods manufacturing, social media, etc.
Large organizations all face the same obstacles: cybersecurity threats; supply chain hiccups; environmental, social and governance reporting; etc. We always can learn from each other. Our best suppliers introduce us to new products and suppliers, show us how those technologies can be used, and help us win more business and drive innovation.
Questioning and categorization are critical in initial supplier analysis. After that, it is pretty easy to plot the suppliers on a chart and see where to focus your energy and the types of relationship to curate with each supplier. For example, a highly strategic relationship might require weekly and quarterly engagements across several levels of two organizations, compared to a less strategic relationship, which only requires annual or quarterly supplier relationship engagements.
AL: You have specialized in information technology (IT) up to now. What drew you to it?
NT: I’ve always been attracted to technology. I like the faster pace of the negotiations and shorter lead times. Early on, I thought I wanted to go into aerospace manufacturing, but when I finally did, I hated having to quote 400-day lead times for some components. I like the fact that I can buy a piece of technology and have it up and running quickly.
In high school, I tinkered with computer networking technology. I helped run all the network cables across the entire campus, set up the computer labs, servers, networked switches. I bored holes under the concrete, ran cables between buildings and through the attics and into each classroom, and set up all the computers. At one point I had the Microsoft Windows license keys memorized because I had to type them in so many times. So, when I got my start at Lockheed Martin and they placed me in the IT services sector, I already had a basic understanding the first time I walked into a data center, so I could comprehend the engineers’ needs better than my peers.
I quickly became the guy who could sit with the engineers and understand the technical aspect and translate it into layman’s terms for the finance and business operations folks and the executives. So, when the team needed to purchase a piece of technology and finance or leadership questioned why we needed it in a certain configuration from a certain manufacturer, I could explain why we couldn’t cut costs or switch technology platforms because all of the gear needed to be compatible with the existing environment.
I was lucky very early on to find that niche. It became my superpower. With my contracts and finance background I could be the bridge between technical staff and finance, legal procurement, and executive leadership. I could be the glue that helped bring everyone together, manage all the negotiations, and quickly navigate the procurement process faster than anyone else. Everybody could put their trust in me to be that middleman for them.
AL: You were boring holes for cable, memorizing license keys. Where does contracting come into this picture?.JPG)
NT: I didn’t know what I wanted to do as an undergraduate. I started as an electrical engineer, and I immediately failed chemistry. I tried to run away from anything to do with math. I went into business marketing to avoid math, but by the end of it, I was bored. I didn’t want to go into that either. I bought a one-way ticket to the South Pacific and my plan was to leave as soon as I graduated.
Then, during my last two quarters of school, I took two business law classes with Professor John Wyatt III, who taught at California Polytechnic State University (Cal Poly) and runs their contracts program. He also was an adjunct professor at my alma mater, La Sierra University. For some reason, the business law classes, especially the contract law class, stuck with me. I would wake up on Saturday mornings and read until 11 o’clock before I got out of bed for breakfast.
I found the case studies so interesting, especially how often the outcomes of the cases could have changed drastically based on the rules, slight changes in communications between the parties, or other subtleties. I took those two classes, loved them, and I still left the country for two years. But while I was out of the country it was nagging me. I wanted to go back and tackle it. So I followed Professor Wyatt to Cal Poly where he has a full government contract law program, and I completed an MBA specifically focused on finance and government contract law.
Dr. Wyatt pushed all his students into NCMA. That’s how I got my start. He had us present on the Truth Negotiations Act at the local San Gabriel Valley Chapter. He would advocate for us and work out deals for accommodations and entry to the NCMA national events like World Congress and the leadership conferences in exchange for volunteer hours. Through those events, I began meeting the people who would become my industry peers and close friends over my career.
One thing that really stood out to me when I joined NCMA was the level of diversity across the industry. I saw more women in leadership and more leaders of color across the government contracting industry. What also was amazing was the opportunity to strike up a casual conversation with a retired general, or rear admiral, or the vice president of a large company or the director of a defense agency. You have an opportunity to talk to them on a first-name basis, get to know them for who they really are, and even ask them questions about their careers. My two favorite questions to ask were, “How did you get into this career field?” and “What was one of your biggest failures and how did you bounce back?”
I got my start in the industry when Dr. Wyatt shoved me in front of two Lockheed executives who were on campus one day. He said, “This is Nick. He’s a great student. You should hire him!” Two months later, they called me out of the blue and asked if I would like to intern in Colorado Springs.
After Lockheed I went to AECOM and helped lead their global category management strategy for IT hardware, software, and telecommunications. A year later, I got a call from a previous manager with an opportunity to help split the IT services sector of Harris Corp. off into a new, privately owned corporation. (Peraton, formerly Harris Government Services, was acquired by Veritas Capital in 2017.)1
It was a great opportunity to rebuild the corporate infrastructure from the ground up with a company that already had a solid billion-dollar annual revenue portfolio. It was like being at a startup but with more stability. We couldn’t take any of the legacy IT systems to the new company. It all had to be replaced without causing interruption to the daily operations. We successfully ripped and rebuilt the entire underlying business infrastructure in about a year and a half.
It was fun. It was fast and there were lots of opportunities to do what I love best: negotiate. They told me, “We need to buy IT infrastructure. We need to set up cybersecurity policies. We need a whole new HR system. We’ll tell you what we want, you go negotiate the best deals possible and help us build a long-term procurement strategy for all of it. It’s okay to fail and move forward fast.” It was a good training ground to push past my limits and expand my skills.
I did somewhere between 200 and 300 negotiations during that period. It gave me an opportunity to test out asking for certain concessions I knew others had been successful at getting but I never had been able to pull off. I had multiple opportunities to ask and fail and ask and fail and eventually over time I would figure out the right approach and become consistently successful. It gave me a platform to just play. I don’t think people get that kind of opportunity often enough, to be able to experiment, not become overly concerned with small failures, and be given the chance to learn from those experiences and develop their own personal style.
That experience helped me develop my unique, personal approach to negotiating. I was able to practice over and over again under a variety of circumstances. I would write in a journal about each attempt, what went right and what went wrong, and then revisit those lessons as I prepared for the next negotiation.
AL: What did you finally figure out how to ask for?
NT: A variety of things, but the delayed software license deployment plan, which I shared at last year’s Government Contract Management Symposium, has been one of my most successful strategies. Software quotes base the total cost on the assumption of 100% utilization from day one. In reality, it might take six to 24 months to fully deploy all the licenses. You have an initial implementation and installation phase, then there is user acceptance testing to gather feedback, and then you may need to onboard users in phases to avoid major disruptions to the entire business. That could be by department, geographical region, or some other criteria.
This provides justification to make an argument such as, “Yes, we are purchasing 100,000 licenses, but based on the deployment plan I will not reach full utilization until month 19. The total cost of this deal should be adjusted to align with this deployment plan.” The strategy is fairly simple, and can even be justified with simple line graphs, but the timing of the ask is everything. If you attempt to ask for delayed deployment too early, you are likely to be told no right off the bat. Or, the sales rep might accept your request, but reduce the discount percentage they were initially going to offer. There is an order of operations as to when information should be shared with suppliers and when certain asks should be made.
AL: How did you come up with the delayed licensing idea?
NT: I had been thinking about it for a long time, but I never tried it. One day I went to a workshop led by a group of ex-sales executives from several large technology companies. They were the ones who wrote the sales playbooks for their companies. They shared that most technology sales companies have three-to-five-year plans for continuously upselling customers from the very first engagement to after the initial sale. They often disguise the intent with language like “maximizing customer value.” It is not a coincidence that many software-as-a-service (SaaS) customers end up with total cost increases at the time of renewal that far exceed what they had planned for.
That workshop validated a lot of technology sales conspiracy theories that I had held for years, but that I could never prove. It gave me the confidence to start treating negotiations like a strategic sport, developing strategies for both the short and long game. My early attempts to reinvent my negotiation strategy failed miserably, but I kept trying. Each time, I would slightly adjust my approach. Over time I narrowed it down to what worked and didn’t work until I was able to achieve consistent results.
There are lots of sales tactics and sales playbooks out there, especially in the software space. Sales reps will try to control your story as much as possible. Some companies will talk to an executive, a janitor, or pretty much anybody with a heartbeat to gather as much information as they can about your company – what systems are being used and your pain points. There are artificial intelligence software packages out there that will help sales reps analyze their phone call transcripts in real time and provide conversation topics while they are on the phone with you.
Another strategy that took me a while to learn was how to take control of our story early on. Sales teams are notorious for seeking out information about your company. Then they will approach your executives and say something like, “Hey, we’ve been engaging with all these groups across your organization and are working on a solution to help solve such and such challenges. We understand that you are concerned about these potential impacts to the bottom line if you do not solve the issues by this date.” Often, they are not really working on anything; they’ve just had random conversations with non-decision makers. They will use this information to start formulating what products and quantities they want to sell you before you have had a chance to determine for yourself what you actually require. I try to minimize conversations between sales reps and executives early on.
I first sit down with my team and ask why are we looking at this technology or product or service? What is our vision for the end state? What are our goals? What are our pain points and the potential impact on the organizat ion if we do not resolve these problems? Is there a certain timeline by which we need to resolve the issues? I try to take on the persona of a sales rep and answer the same questions I anticipate they will ask.
There’s a sales qualification playbook called MEDDPICC2 that lists specific information salespeople must acquire to successfully close a deal. These are very successful tactics used by many SaaS sales teams, and they have been proved to help close more deals, faster, and with less friction. By using MEDDPICC, I gather up these critical pieces of information ahead of time, develop my own story line around that information, create a communication plan, then choose the timing of when that information gets released to the sales reps.
By knowing the MEDDPICC playbook, I can recognize the tactics used by sales teams. The other day, a sales rep was adamant with me about engaging with one of our executives. We weren’t ready to begin executive- level conversations with any of the suppliers in the competition. He finally figured out a way around my team and got hold of an executive’s email address. He started off the email with, “It was important I reach out personally to let you know what a pleasure it has been for our team to work with Nick Traboulay.”
When the executive showed me the email and asked if we should meet with the sales rep, I couldn’t help but laugh. I pulled out the MEDDPICC playbook, and read aloud from page 128, where it says to write a letter to the executive “that introduces yourself and your solution whilst, at the same time, praising your champion for what an outstanding job they are doing on the project. You can even call out the value they have helped you to uncover. It is quite hard for your champion to be angry at you when you’ve effectively just been praising them to someone senior within their organization.” In MEDDPICC, a “champion” is a point of contact who is likely to advocate for a sales rep. I told the executive that he did not need to respond.
I try to take the time to get to know the sales reps, to recognize them as human beings who are trying to do their jobs, help customers solve problems and meet their team’s objectives. I like to get to know about their companies. “Tell me ab out your business model, your pricing models. How do you guys fit in the industry? What other companies are like you? What are the challenges you encounter when trying to close a sale?”
During friendly conversations I’ll nonchalantly ask questions such as, “How are you incentivized? Is that structure similar to or better than your previous sales jobs? Are your commissions linked to the overall deal size, annual recurring revenue, the first year’s revenue, or some other model? What are the annual sales quotas like for your team? Do you have an individual quote or a team quota?”
I’ll very candidly ask them these questions during a friendly conversation, and more often than not, they will share. I have found that if you are very friendly and treat others with respect and dignity, they are very likely to be upfront with you as well. Seemingly trivial details they share can become very important in shaping a negotiation strategy and identifying win-win opportunities for both parties,
while still achieving best-in-class pricing.
Sales reps have very limited power to negotiate outside of certain ranges. They might have a little wiggle room on profit margin, but if you want to go over and above the standard discounts, you’ve got to help them build a credible story with a high probability of closing a sale within a specific timeframe. You have to provide enough ammunition for them to take it to the backend deal desk and to their senior leadership for approval. It’s like buying a car from the dealership. You know you haven’t reached a good deal until it requires approval from several layers up the management ladder. In software sales, this is usually a vice president, but can also be the chief financial officer or the CEO.
I’ve had deals that needed to be taken to the board of directors for approval. That’s when I know I am getting best-in-class pricing.
AL: You’re familiar with category management. Where you buy in the supply chain actually makes a big difference. Does that play into your thinking when you’re doing negotiations?
NT: Yes, I always try to negotiate pricing directly with the original equipment manufacturer (OEMs), even if I plan to place the order through a reseller. Most of the time, the OEM is responsible for controlling the price and it passes along the discounts. In the commercial electronics industry, deal registrations are a major factor in determining which reseller gets to offer the best pricing. Sometimes, the first reseller to register a deal in the OEM’s system locks in the deal registration with an extra percentage discount. No other reseller is able to get that level of discount. I always try to bypass that process, take control of the price negotiation at the OEM level, and then push my re-
sellers to compete on their markup.
A few years ago, I was asked to negotiate a multi-million-dollar network hardware deal for a new project that if successful would then be replicated about 30 times over in the following three years. I went straight to the OEM and said, “I have an unplanned sales opportunity that will help you exceed your quota and likely put you in the Presidents Club for your sales organization. We want to negotiate directly with you. Here is the discount level we want, based on our research and knowledge of what best-in-class deals look like with your company.
“I am going to provide a specific list of resellers for you to send the pricing. I want them to compete for my business equally. None of them should receive a deal registration over the others. Whichever one offers me the lowest markup during my request-for-quotation sourcing event can be assigned the deal registration.”
Because we built such a compelling story, we got a great deal from the OEM and we had multiple resellers offer negative markups to win the business.
AL: Do the same things apply whether you’re working with a hardware seller or a software seller?
NT: Yes, but on the software side, there’s usually more flexibility on pricing because the gross profit margins are higher since there are no costs for physical goods, and there are no supply chain factors such as build time, inventory, shipping, etc. In either case, I always do a significant amount of research ahead of time on the suppliers and their industries to estimate how far I can push pricing and other concessions.
AL: Have you seen a difference in the degree of flexibility and preparation on the government side?
NT: I think there is more flexibility to add creativity in negotiations in the private sector. On the government side, and with many commercial procurement organizations that adopt similar procurement processes, they do a great job of training staff to follow a standard process, but rarely teach staff how to ask for more than just additional discounts off the list price.
Such training only takes you so far. When you are trying to get the absolute best price and value, you need to think about other ways to drive down total cost without focusing on the discount off list price. There is a wide variety of other valuable concessions that could be asked for.
AL: When you’re doing deals, how much is written down?
NT: Everything is written down and documented. We usually start off with broader qualification conversations, then move into the official requests for proposals (RFPs) or requests for quotes (RFQs) sourcing process only after we have narrowed in on those qualified to compete.
I also like to have the suppliers provide the first draft of a statement of work. Many times, as a customer, you don’t fully know what you want until you see something laid out in front of you. It is much easier and faster to start with an initial set of proposals you can then revise and make your own than to start from a blank slate.
However, if you are taking this approach you must make sure you are taking the time to fully revise the documents, create generalized statements, and strip away any language that may make it seem like you are favoring one solution provider over another.
AL: It sounds like you have to hold as much information in your head as a professional card shark.
NT: It’s funny, right before we got on this call, I was watching a software demo of an artificial intelligence bot that will negotiate certain terms and conditions on your behalf, and it played out very much like a poker game. This bot used social engineering tactics to accomplish the intended objectives.
It started off with a bunch of questions that are geared towards getting the opposing party to say “yes.“
The back-and-forth conversation went like this: “Hi, are you having a great day?” “Yes, I’m doing great.” “Just to confirm, is this your name? And you’re at this company?” “Yes.” “Can you confirm that this is your email?”
Yes, yes, yes, yes. The bot gets the prospective buyer into a positive state of mind, and then it starts laying out why it wants to negotiate. It then acts like it is offering up choices. This is the social engineering aspect of getting to yes: Providing options so prospective customers feel like they’re in control. Providing opportunities for them to state their goals, then trying to align their goals with the negotiation. Offering them an opportunity to counteroffer.
AL: So what is your plan B if you’re replaced with AI?
NT: I’ll just go surfing.
AL: What is surfing about for you?
NT: I’m from the Caribbean. I grew up near the ocean and I still am here in Southern California. The ocean keeps me centered and grounded no matter how stressful life gets. It’s my weekly baptism, just washes away all the muck and gets me back into a good, centered state.
AL: Everybody who recommends you on LinkedIn, mentions you are creative. Where does that come from and how does that serve you?
NT: If I had to guess, I would say it is because I’m willing to quickly re-evaluate a scenario and adjust when presented with new information, and I’m comfortable making decisions and owning the outcomes of those decisions.
I think a lot of that comes from surfing and other extreme sports. Waves are dynamic. There are multiple elements shifting at every second, and you have to quickly determine what is trivial and what is critical. Your eyes are continuously scanning everything around you while you’re pumping down the line, and you’re constantly making micro adjustments in real time based on what you are seeing and feeling: Am I able to turn? Can I slow down and pull into a barrel? That was a bad decision, can I recover and speed back up? Am I able to navigate past those dangerous rocks or should I get out now?
That same kind of mentality comes into play with the way I approach my work. I don’t like slow, redundant tasks. Give me the drama, give me chaos, give me the difficult projects with constantly shifting elements that are outside of our control. Those are the environments where I do my best work.
AL: Are you a chaos junkie?
NT: I don’t think so, but others might see it that way. I’ve always been drawn to activities that some might consider reserved for adrenaline junkies: surfing, skateboarding, rock climbing, jiu jitsu. I grew up with these activities, which I would classify as highly complex problem solving with dire consequences for failure. These activities train you to maintain a sense of calm, creativity, and quick decision-making in a variety of mentally and physically stressful scenarios. I have transferred those skills into how I approach my career. CM
ENDNOTES
1 https://washingtontechnology.com/2017/07/harris-it-spinoff-takes-on-new-name/356756/
2 MEDDPICC, a deal qualification methodology, was developed at Parametric Technology (now known as PTC) by Jack Napoli, John McMahon, and Dave Dunkel in the 1990s, when they used it to more than triple sales from $300 million to $1 billion in just four years. https://thinkinsights.net/consulting/meddpicc/#origin