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 Renegotiation: Improving Sourcing Contract Terms
eNews |
Category: Negotiations / Renegotiations Benchmarking Outsourcing
As many as one-fifth of outsourcing clients are dissatisfied with their sourcing contracts. Nonetheless, incumbent sourcing providers are rarely displaced (with some notable exceptions). Why is this so?
Often, presumably, incumbents perform satisfactorily, and there is much wisdom in the maxim "if it isn't broken, don't fix it." Incumbents enjoy huge practical advantages over any competitor, including inertia and intimate knowledge of the customer's business. Changing suppliers, moreover, is often complicated, disruptive and costly. Small wonder that even dissatisfied customers may prefer, or at least settle for, "the devil they know."
Faced with these realities, what can customers do to improve their position when contracts lapse? Skilled negotiators know the importance of having an alternative and being properly prepared for a contract renegotiation. Otherwise, one becomes a captive, dependent upon the other side's goodwill and willingness to make unilateral concessions. The crucial thing, therefore, is to create bargaining leverage in the form of credible alternatives to the contract provisions, without damaging existing relationships that, in the end, are likely to survive.
Surprisingly, few customers actually read the contract terms. Rather, they put the document in a drawer and leave it there - unread and unused. This is a pity, since many contracts contain provisions that anticipate expiration or renegotiation, and provide leverage when those opportunities appear. This article provides a list of common contract provisions as well as tips on how to go about improving those contract terms.
The Art of Benchmarking
White Paper |
Category: Benchmarking IT Infrastructure & Applications
This white paper discusses the basics of cost and price benchmarking, why "lowest quartile" clauses undermine the structure of outsourcing agreements and how to optimize negotiations with outsourcing service providers.
If you have entered an outsourcing agreement with a benchmarking clause, or if you’re planning to negotiate a new sourcing agreement, this brief paper will help you understand the unique challenges of the benchmarking process.
Contract Renegotiation: Upgrading your Outsourcing Relationship
White Paper |
Category: Negotiations / Renegotiations Benchmarking IT Infrastructure & Applications...
As the outsourcing market matures, technological developments, standardization, heightened competition and benchmarking are pushing outsourcing contract renegotiations rapidly up the sourcing agenda. In fact, Alsbridge research shows a full 80 percent of all outsourcing contracts are renegotiated at some point during the lifetime of the contract.
Unfortunately, the renegotiation process can be extremely complex and client companies are often at a disadvantage when going up against providers who have vastly more knowledge of the outsourcing market. This white paper describes the fundamentals of contract renegotiation success and how to upgrade your current outsourcing relationship.
Benchmarking in Outsourcing: Keys to Driving Long-Term Value
White Paper |
Category: Benchmarking IT Infrastructure & Applications Finance & Accounting Services...
Benchmarking in outsourcing has experienced significant changes in its relatively brief history evolving from a single-focused pricing comparison into a richer, broader array of tools that both buyers and providers can use to improve the process, the relationship and ultimately the outcomes.
This white paper covers a spectrum of benchmarking activities that can drive significant returns in performance, cost reduction, innovation, injection of industry best practices and continuous process improvement.
There’s no question that any benchmarking effort takes a real commitment in time and expense, however the benefits are almost infinite.
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