7 tips for managing an IT outsourcing contract

Stephanie Overby

Designating a customer representative enables the IT organization to control messaging, better adhere to the contract, and avoid situations where the communications or conduct of less informed personnel create ambiguity and uncertainty. And when disputes arise, you'll only have to review the email of the one person whose communication has legal relevance versus dozens.

2. Require the provider to log requests and complaints

In many outsourcing situations, the only obligation of the customer is to pay the supplier. Not so in IT, where engagements required the customer's contribution or collaboration. "The customer will tend to have obligations, and if the customer doesn't perform those obligations, those may be an excuse for performance," Peterson says.

However, should the IT outsourcing provider have a request for the customer or raise an issue of customer performance that it says excuses one of its obligations, it's important to compel the provider to write the issue down and keep a log of all such problems.

Require a log showing requests and responses on contractual matters.

3. Clarify cloudy terms early

It's important to keep the written record of the engagement as clear, complete and accurate as possible. When there are projects or situations that the contract does not explicitly address, the customer should clarify them early on and in writing. "That's the best time to reach agreement because the parties are most open to cooperation at that point," Kriss says.

If the details of a more granular project isn't specified in the main agreement, write down a summary of what each parties responsibilities are and have everyone sign off on that before embarking on their work. "If there's clarity in the written record, the likelihood of the situation getting worked in the context of outsourcing relationship is much greater," says Kriss. "It matters so much."

4. Send breach notices right away

Peterson sees customers who endured problems in their outsourcing relationships for years, but had no record of them because they thought sending notices to the provider would create tension or contention. That's a mistake. Customer should send a written notice of breach or failure the very first time it occurs-and every time thereafter.

"This needs to be a standard best practice that a company always uses," Peterson says. They need not be combative, but rather polite and factual. "If you can establish that pattern, particularly with a single person comfortable sending these notices that are clear and useful, you will establish a much better record," Peterson says.

All customer employees interacting with the service provider should be instructed to notify the designated customer representative if they think the service provider may have breached the contract. The designated representative can check with legal counsel to decide whether to send a breach notice.

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