Overcome the challenges of technology sales in Canada

As some Indian technology vendors have already discovered, Canadian businesses can be demanding (and perhaps exasperating) buyers of technology-related goods and services. I see two reasons for those aggressive customer expectations.

First, because of Canada’s spectacular growth since 1945, the country has an advanced technology culture and much of its competitive advantage is based on its technology leadership. Even though its population is only 35 million, Canada has the 15th largest economy in the world and its people are the third-wealthiest (based on per capita GDP) among the G20 nations.

For three generations, imported technology – perhaps most notably information technology – has fuelled that economic growth. Canada’s businesses are now among the leading users of advanced communications and related technologies in the world.

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Second, Canada’s voracious appetite for technology goods and services has been satisfied partly by its neighbour, the US – the most dominant and aggressive exporter of technology in the world. Through decades of dealing with US vendors, Canadian technology buyers have developed exacting and acute expectations about “correct” technology procurement processes, contracts, risk management, local vendor presence, and commercial loyalties.

Such expectations can pose daunting challenges for even the world’s most determined technology vendors.

Getting it right

I have a few suggestions for Indian companies that are dealing with Canadian technology buyers, which should minimize any transactional challenges that may arise, as well as expedite your technology sales cycle in Canada (music to the ears of your sales team):

The contract: Canada’s well-defined corporate governance, regulatory compliance, and professional requirements (legal, procurement, accounting, technology management) demand well-written, comprehensive and “evidentiary” technology contracts. To drive a sales transaction to closure, technology vendors should follow the buyer’s procurement and contract formulation process. This can be expensive and time consuming – but it is necessary and can have long-term client loyalty pay-offs.

Canadian buyers may insist on contract terms that vendors may not be used to accounting for in their pricing models. Whether those demands are related to extensive reporting, acceptance testing, joint management committee meetings, quality assurance practices, local key-person requirements, or some data retention within Canada – it all adds up and should be reflected in reasonable pricing proposals.

Commercial role of lawyers: Vendors should ensure that they are represented by lawyers who are familiar and experienced with Canadian and US legal practices and contracting norms. A failure to appreciate legal and contracting norms, or a lack of technical legal knowledge, can result in disastrous transactions.

Canada has highly specialized technology lawyers (both in-house and external) who provide sophisticated commercial and management advice that goes to the heart of closing technology transactions. A technology buyer’s reliance on such legal advisers at the negotiating table can put a vendor at a disadvantage in the negotiations and resulting contract.

Risk management: Buyers often insist that a technology vendor assume all of the financial risks (and liabilities) for the vendor’s misconduct or failure to perform the governing contract. The best way to address this is to ensure that the transaction includes as many responsive and practical performance remedies as possible. The more those practical remedies are designed to respond to, mitigate, and even avoid, precipitating financial liabilities, the more receptive Canadian technology buyers will be to reasonable negotiations related to financial liability limitations and exclusions.

To business adages in Canada directly apply to India’s technology vendors. The first is, “You have to spend money to make money”. Whether related to marketing and brand awareness, travel across long distances to meet customers and prospective customers, drawn-out (and often unsuccessful) competitive tendering processes, fees for management and professional services, or otherwise, the cost of selling technology goods and services in Canada is exorbitant.

The second business adage is, “You get what you pay for”, and foreign technology vendors need to ensure that their investments are as adequate as they are strategic. Many excellent foreign technology vendors have floundered (if not failed) in Canada because they achieved exactly the poor success that they paid for.

Canada can be an extremely lucrative market, but it is expensive to get commercial traction in Canada. As the robust Canadian investment histories of profitable companies such as Hewlett-Packard, IBM, Microsoft, SAS Institute, SAP and Oracle in Canada illustrate, this is not a market that typically rewards miserly, or parsimonious, investment.

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Duncan Card, a senior partner of Bennett Jones LLP, represents many international technology vendors in Canada. He is regarded as one of Canada’s leading technology lawyers. His best-selling book, Information Technology Transactions: Business, Management and Legal Strategies (published by Carswell), is sought after by both buyers and vendors of technology.