Whilst clients and their outsourced partners will make every effort at the time of writing, contracts can often be described as a 'point in time' document. By their very nature they become less meaningful during the contract’s lifetime.
One of the primary reasons for a ‘jaded’ contract is down to the people involved. In the world of IT, as in the rest of corporate life, it is almost certain that many of the people with detailed knowledge of the contract, its meanings and principles at the beginning, will have move on before it’s time for contract review and renewal and the principles become lost in the mists of corporate time.
Often, clients can fall into the trap of trying to fix current issues during contract negotiation. Contracts are generally three to five years long but, at the outset, organisations often focus on short-term issues and historical problems - for example service desk performance - and put more weighting on this when choosing or negotiating with a supplier. Contractors then become focused on these issues, which are often resolved within six to twelve months, leaving everyone to wonder what to do next and losing sight of more important, long-term priorities which are left to drift or managed less effectively.
The solution is flexible long-term contracts, with the ability to change behaviours and priorities at any time during the overall contract period.
There are always peaks and troughs in any in-house supplier relationship. Often companies expect supplier energy levels to be high throughout the contract, while suppliers naturally put more energy in at the start and again towards the last 12 to 18 months as contract renewal becomes a priority. This may sound cynical, but this is a cycle which can be likened to any relationship in life.
The relationship usually starts off with high energy from both organisations – it’s usually called the ‘Honeymoon Period’. This is often followed by a period of disillusionment, where the benefits of the outsourced service are not realised and challenges with the in-house team occur. Over time this improves, with increased focus and effort from both parties. It is important for both sides to recognise, accept and overcome these peaks and troughs through communication.
Another major factor that often determines the success of an outsourced contract is the skills and structure of the in-house team. This is especially true when an organisation embarks on a major change to its outsourcing model. In these situations it is imperative that they also consider the impact on behaviours and skillsets within the organisation itself and the changes that will be required.
For example, moving from a predominantly in-house to outsourced model requires different skills and in-house departmental structures. An organisation needs to change culture, structure and strategy to be able to handle this. In-house resources no longer have to manage the technical; they do have to manage relationships. Because these skills don’t always come naturally to IT professionals, there is often an exodus as in-house staff seek the familiar cultural environment that has moved across to ‘the supplier side’.
Multi-sourcing now requires effective governance, driven in-house, including detailed negotiation of SLAs and managing hand-off points and supplier performance. There is a need for principle agreements to be signed-off between outsourced organisations themselves and clear guidelines on how they will interact (Operational Level Agreements).
In essence, this process is about in-house teams and suppliers recognising that contracts aren’t always watertight and knowing where responsibilities lie. This requires an open and honest relationship between client and supplier and also supplier to supplier. It’s almost a diplomatic responsibility for the in-house department.