Getting the Best Contracts

By Michael Caton  |  Posted 2004-03-01 Print this article Print

Getting the Best Contracts

In a survey of end users by Gartner Inc., 55 percent said service agreements did not provide return on investment or strategic business value.

This may be caused, in part, by the legacy of vendors selling support well after the software deal has been done, according to Bob Igou, an analyst at Gartner, in Stamford, Conn. Key to getting the best value is making sure an appropriate level of support is purchased with the software. Dont even entertain a pitch from a vendor sales representative unless it includes an explanation of the products support options.

Maximizing service and support

Prioritize support options by regularly re-examining contracts

  • Annually or semiannually evaluate which applications are most critical to business success
  • Identify points of failure in hardware and software for all systems that require ongoing support
  • Request and examine support records from vendors to identify which systems require the most support
  • Evaluate IT staff to make sure core competencies align with system requirements
  • Keep an eye toward future IT initiatives and dependent systems
  • Keep an updated estimate of costs of downtime on critical applications
  • Cancel contracts for applications that are no longer deployed in the organization

    Align contract terms with business needs

  • Look at third-party support providers for cross-system expertise, managed escalation
  • Always specify an escalation path and escalation terms in critical contracts
  • Ensure that critical-situation support hours match escalation path
  • Use support history to downgrade or upgrade service contracts
  • Negotiate carry-overs for training and incident support credits
  • Look at outsourcing applications as a way to scale for expected growth
  • Write contracts according to organization structure, consolidating division and business unit contracts when possible

    Source: eWEEK Labs
  • One important factor in getting the best agreement is broadening the options and spelling out key terms. Shopping around and looking at options such as third-party support providers, outsourcing and ASPs (application service providers) can give companies alternative ways to achieve broader support coverage, reduce risk of downtime and free up resources to better manage other systems in the organization.

    Companies also shouldnt discount weighing softer criteria, such as flexibility and responsiveness to feedback, because these factors can be important when dealing with sudden business growth and change.

    Contracts for premium services should stipulate the size and expertise of a dedicated account team and ensure that it is always adequately staffed and trained. Having an understanding of a vendors internal organization and support management processes is also a good way to ensure it has the infrastructure to back up incident escalation terms.

    Understanding interdependencies among applications and system hardware as well as the expertise available from all relevant vendors helps organizations create appropriate escalation paths or identify third-party support providers that can effectively manage critical-situation resolution.

    With vendors now often including consulting and training as part of premium service offerings, having a sense of upgrade plans and travel budgets can give IT organizations a way to negotiate features they may not use, such as off-site training, in exchange for ones they likely will use, such as consulting.

    Companies also need to negotiate how unused consulting hours and support incidents can be rolled forward to new contracts or be credited in other systems purchases.


    Submit a Comment

    Loading Comments...
    Manage your Newsletters: Login   Register My Newsletters

    Rocket Fuel