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 Acing Contract Renegotiations
Category: Negotiations / Renegotiations IT Infrastructure & Applications Finance & Accounting Services...
No matter how well you plan, there will always be things you will want to change once you get into your outsourcing contract deal. Sometimes these will be relatively minor issues that can be dealt with through change control. And, of course, there is always the opportunity to make changes once the term runs out. But what happens if the changes you want amount to a renegotiation of your provider contract? This article looks at the key issues of both mid- and end-of-term contract renegotiation and suggests ways in which your negotiating position can be improved.
End-Term Contract Renegotiation
What should you do at the end of an outsourcing contract term? The easiest thing would be to merely roll the deal forward. However, in doing so you may miss a great opportunity to look afresh at all aspects of the deal with the ultimate advantage at your disposal – competition. At this stage there is nothing to lose, and everything to be gained, from running an open competition to reassessing the deal and the market. However, this all depends on one key assumption - that it is a practical proposition, operationally and financially, for you to move from your existing supplier or to bring the work back in house. (By the way, this is also an important factor in getting other suppliers interested in bidding. Why would they invest time and effort to submit a proposal if it appears you can't move anyway?).
7 Secrets to Renegotiating your Outsourcing Contract
Category: Negotiations / Renegotiations IT Infrastructure & Applications Outsourcing
Despite the maturity of outsourcing practices, a surprising number of companies lack the necessary expertise needed when it comes to negotiating a contract, which leads to outsourcing relationships that do not provide benefit to either the client or the provider.
A strong and satisfied client relationship is essential especially during a contract negotiation. Whether you are negotiating an outsourcing contract for the first time or renegotiating an existing contract, clients must continuously evolve, improve, and innovate to develop stronger, longer-term, and more trusting relationships with their service providers.
This article outlines seven key success factors in negotiating a contract that can help your firm avoid or recover success from a poor outsourcing relationship.
First, hire an outsourcing advisory firm to work with you throughout the contract negotiation process. These advisory firms eat, sleep, and breathe outsourcing. They know which providers can meet your needs and what is happening in the market. With their deep industry expertise, these advisors have the essential processes, knowledge and experience needed to acquire a market leading deal. Also, these advisors have expertise knowledge regarding the features of an outsourcing contract including pricing, services considered standard in the industry, service levels, and all other business aspect of outsourcing.
Second, hire an external counsel that specializes in outsourcing. A solid outsourcing contract is important, standard purchasing terms and conditions are not enough. Similar to outsourcing advisory firms, outsourcing legal firms understand the nuances of contract language and often have experience understanding how courts have interpreted contract language. Hiring an external counsel that specializes in outsourcing will help you avoid issues should your outsourcing relationship start to deteriorate.
Outsourcing Management: Do You Have an Empowered Transition Team?
Category: Transition & Governance IT Infrastructure & Applications Outsourcing
Value can be lost at several points during the life of an outsourcing agreement. It starts with attempting to perform transition with staff on an “as available” basis rather than as a dedicated transition team. This loss of value can begin immediately after signing the contract if transition management does not receive the attention and level of importance that it deserves.
During an outsourcing procurement cycle, much attention is paid to the provider’s transition plan which will call out specific tasks that are the responsibility of the provider as well as tasks that need to be completed by the client. Unfortunately, the time devoted to transition planning on the client side is minimized.
One of the first mistakes a client makes is to assume the retained operations staff can be full-time members of the transition team. Making this decision will adversely affect both the transition and the on-going operations. Transition is a phase and a work effort all to itself. It cannot be successfully accomplished from the corner of a desk but must be led by a dedicated staff.
In order to be successful, transition management needs a single point of contact for all transition activities. That contact, the transition manager, may report directly to the CIO or to a key senior manager for the duration of the transition. The transition manager’s prime mission is to manage the pieces of transition in a way that allows everything to stay on schedule. They will work with key staff, members of the provider transition staff, key stakeholders, as well as other provider team members.
The transition manager is also responsible for working with the client communications staff to communication activity related to the transition. Key transition communications need be tailored for IT leadership, business leadership and other key client stakeholders including major third-party contractors of the client that will be affected by the transition.
Your Provider Hates Your Outsourcing Contract Too
Category: Negotiations / Renegotiations Outsourcing
Are you too nervous to approach your provider about renegotiating your outsourcing contract? Are you afraid that the mere mention of the “R” word will lead to degradation of services and of the relationship? Don’t worry - it is possible to have positive, productive discussions with your provider regarding outsourcing contract renegotiations. In fact, most providers are willing partners in the outsourcing contract renegotiation process. In addition to satisfying your requirements while maintaining overall revenue and/or profit, the provider can use an outsourcing contract renegotiation to improve their long-term ability to support you while realizing additional standardization and cost efficiencies. This article includes some of the most prevalent reasons to renegotiate your outsourcing contract, today.
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