Lessons for Effective Contract Negotiation with Laurie Ehrlich

In this episode of Contract Heroes we spoke to Laurie Ehrlich, Chief Commercial Counsel at Datadog. We discussed some of the issues surrounding contract negotiation in the SaaS space and what Laurie’s doing to help her team succeed. 

Keep reading to learn more about Laurie’s quest to perfect Datadog’s contracting and her tips for getting everyone on the same page.

The Issue With Contracting in SaaS

Laurie kicked things off by describing the way characters in movies are often in rooms with lots of servers and computers that tell them whether or not things are working properly.

Well, you can’t do that with the cloud — there are no bright, flashing lights to let you know that everything’s running smoothly. Datadog provides that visibility so that companies know how their tech stack is working and are able to fix anything that’s broken.

As CCC, Laurie is responsible for all Datadog’s inbound and outbound contracting. We asked her about the most common industry pain points she sees contract-wise. Her response? Education. “I think it’s making sure that everybody actually understands what we’re contracting about, so does my customer, not the business stakeholder…understand what it is that they are buying?”

What’s Actually Going On?

Laurie described a situation in which her team thought they were getting a tool to help the visually-impaired understand screen text. They thought it was a SaaS solution, but it was actually something that you download on your computer. 

It ended up taking them two extra weeks to close the contract because Laurie’s team didn’t understand that it was something that was happening on someone’s individual computer and none of their data was going to the vendor.

Shocking, right? How would you even think to put something like that in the contract? “It’s even before the contract,” Laurie said. “It’s not about the text in the contract, it’s understanding, and that’s so hard because the business stakeholders know what they’re buying, but it’s hard to fill out questionnaires…you have to find a common parlance that your business people will understand so they can answer the questions correctly.” 

Essentially, if you don’t have someone that can help legal and procurement teams understand what they’re buying, you won’t be able to close the deal. That’s because those teams are super strict about following the rules, and if the rules don’t work for what you’re selling, you cannot close the contract without explaining why exceptions are needed. 

Datadog’s Solution to the Problem

To solve this issue, Datadog does a couple things. First, the company has a contracting FAQ on its website that explains what the business is so that the procurement or legal person receiving the contract has a clear picture of what they’re getting. 

Laurie has also told her team that they cannot reject any customer changes to Datadog’s contracts without leaving an explanatory comment. Datadog has built a (constantly-evolving) playbook to aid in these situations and provide greater clarity for everyone involved. 

Sales Pain Points

We then asked about some of the common pain points encountered on the sales side. Laurie said businesses often experience difficulty when trying to combine their old on-prem agreements and turn them into a SaaS contract. The problem is that many of the clauses just don’t work in the multi-tenant SaaS space.

Educating those customers takes the longest—in fact, Laurie said Datadog has had contracts with those types of customers that have taken years because both parties came from such different POVs of what it was they were buying. 

A Genius Playbook

With her real estate team, she’s creating a playbook to identify what matters to them as a company. What matters in different regions is not the same, because there are a ton of regional nuances in lease agreements, and so Datadog is learning everything together.

Laurie noted that her teams get contracts all the time that they’re not quite sure how to handle, so the challenge is understanding the key points in the contract. It’s really about having detailed conversations with the business stakeholder about what matters most to them. By asking them the right questions, you can more easily negotiate the contract.

Laurie’s team is currently making maps detailing the actual risks of engagement and how they can be mitigated. Part of that mitigation, she said, is having someone who’s responsible for engagement. 

Sometimes having the ability to get out of the contract is the most important element, so it’s important to really understand those risks so that you don’t waste time negotiating things that don’t actually matter to the company. 

Heat Mapping

The conversation then shifted to heat mapping. Laurie’s team is creating heat maps of what matters most. She hopes to eventually put those principles into a CLM and have the CLM read contracts based on that heat-mapped playbook and tell her what she should pay attention to in the contract so her team doesn’t have to read every single line in the contract. 

They plan on tackling the NDAs first. Datadog has one standard NDA, but Laurie said that sometimes they have to negotiate anyway. We spoke briefly about how AI might one day be able to assist with more complex contracts, but at the moment, it’s still easier to have a standard version that can be slightly tweaked as needed. 

Ongoing Education is Key

It really all comes back to education, and Laurie reiterated the importance of helping customers understand exactly what it is they’re buying. To achieve this, she focuses on two things. First, she always tries not to change things for the organization as a whole, but to change things for her team in a way that benefits everyone in the organization.

For example, if they want to switch something up with sales intake, Laurie asks herself how she can do it in a way that’s actually invisible for sales. Her goal is to make things easier for everyone involved. By making things easier, she said, they’ll come to you.

Laurie’s Advice to her Past Self—and Some Tips We All Can Learn From

Wrapping up, we asked Laurie to discuss something she knows now that she wishes she had known years earlier. “I think my two biggest challenges are trying to do too much…and then making sure that you have enough resources to actually do it…” Laurie told us. 

We also asked her to give us some tips on how she’s been training her team. She said that she mostly educates her teams on contract points over their contract escalation channel in Slack, and everyone learns from that. All of those learnings then go into a playbook, so even if they don’t remember, their memory gets jogged when they go back and look.

She’s also working with them on their negotiation skills. She puts multiple people on a contract so that one person isn’t stuck reviewing it on their own. That way, they can make sure all the key points are captured and nothing gets overlooked.

“We’re stumbling on this because it’s a little bit hard with calendars and remembering,” she went on to say, “but I’m trying to get people to invite each other to negotiation calls.” She does this because everyone has slightly different negotiation styles, and she sees value in learning from others in this way. 

What a great conversation! Thanks for reading another summary of Contract Heroes, and thanks to Laurie for sharing such helpful insights. Visit datadoghq.com to learn more about Datadog’s amazing work and get in touch with Laurie! 

Check out our other episodes for more great tips from industry leaders.