Contract Preparation and Closing
Develop IT's own contract negotiation position in advance (for example, by identifying negotiable and non-negotiable items, and considering incentives). Understand the IT service provider's success criteria to create win-win situations.
Improvement Planning
Practices-Outcomes-Metrics (POM)
Representative POMs are described for Contract Preparation and Closing at each level of maturity.
- 1Initial
- Practice
- Rely on the best endeavours of available personnel.
- 2Basic
- Practice
- Prepare contract terms and conditions on a case-by-case basis.
- Outcome
- Whilst a consistent approach may not be evident, the basis for more generalised terms and conditions begins to emerge.
- Metrics
- % of contracts that are based on the same template.
- % of failed Sourcing deals.
- The duration of a provider partnership.
- Practice
- Prepare and close large Sourcing contracts with some input from the procurement function.
- Outcome
- The involvement of procurement in contract preparation and closing benefits the large Sourcing contracts through incorporating a business perspective.
- Metric
- % of contracts designed in co-operation with corporate procurement.
- 3Intermediate
- Practice
- Adapt Sourcing contracts to reflect the specific requirements and circumstances of the Sourcing context.
- Outcome
- Contracts reflect the overall goal of a value-creating provider partnership, not just a cost-saving one.
- Metrics
- Duration of provider partnerships.
- % of Sourcing partners that are not meeting performance targets.
- Practice
- Ensure contract preparation and closing involves input from the procurement function.
- Outcome
- The IT function is in alignment with the procurement function and the organization contracting process.
- Metric
- % of contracts designed in cooperation with corporate procurement.
- 4Advanced
- Practice
- Consider provider incentivization clauses that specifically address the Sourcing provider's own success criteria in Sourcing contracts.
- Outcome
- Sourcing contracts provide win-win opportunities for both the organization and the provider.
- Metrics
- The duration of provider partnerships.
- % of satisfied staff.
- Practice
- Fully integrate contract preparation and closing in the procurement process.
- Outcome
- Potential synergies can be realized.
- Metric
- # of synergies realized.
- 5Optimized
- Practice
- Ensure inter-provider operational level agreements (OLAs) in Sourcing contracts in multi-Sourcing contexts are included.
- Outcomes
- Providers are incentivized to co-operate with one another for the benefit of the IT function and for themselves.
- Templates are up-to-date and can be used in different contexts.
- Metrics
- % of multi-sourced spend for which inter-provider OLAs are in place.
- The frequency of reviews of OLA/SLA templates.
- Practice
- Continually review on an organization-wide basis, contract preparation and closing activities.
- Outcome
- Realized synergies can be optimized.
- Metrics
- # of joint meetings with procurement on contracting improvement.
- # of synergies realized.