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Drafting ITO Contracts in the Cloud
Alsbridge predicts Cloud-based delivery of applications will account for half of the market within 5 years and outsourcing e-mail as a service will be routine within 2 years.
The key to all successful outsourcing relationships is the quality and flexibility of the commercial agreement between the customer and the supplier. An IT outsourcing contract can be anything from a highly complex and weighty document to a shorter 'consumer' style arrangement, but either way it is crucial to all outsourcing relationships as it provides the legal framework between the organizations involved.
In addition to establishing a good contract (continue reading for discussion of what constitutes a 'good' contract), whether it be a traditional or Cloud agreement a key differentiator for success is the structure set up to manage the deal, as this establishes the approach for operating the contract, the interaction between the parties, and ultimately the relationship between the organizations. It is not the length or complexity of the contract that is the key to a successful relationship but the quality of the prior dialogue and resulting understanding of both parties embedded within it.
The Alsbridge definition of a 'good' outsourcing contract is one that is fair and sustainable between supplier and customer, and based on trust and partnership throughout the contracting process and beyond. A contract must stand the test of time; this means it continues to meet both parties' expectations during the lifetime of the contract, not just at the start or at key milestones. This applies to both Cloud and traditional outsourcing contracts. The customer should receive the services and benefits they require, at the right time, while the supplier operates a profitable account and meets its own strategic objectives.
Many customers will continue to contract outsourcing deals as they have done in the past but the really successful organizations will work collaboratively with their partners to move toward Cloud-based services integrated with other traditional 'core' infrastructure. The incumbent service provider has the advantage of knowing the customer organization, the technical architecture and the quick win Cloud services it could implement. The successful service providers will work with their customers to develop their Cloud service offering and be able to develop their market.
This paper defines the key principles for what constitutes a 'good' contract and deal management organization in the current outsourcing landscape and addresses the key challenges for contracts in the future Cloud-based, on-demand IT and business services environment.
The key to all successful outsourcing relationships is the quality and flexibility of the commercial agreement between the customer and the supplier. An IT outsourcing contract can be anything from a highly complex and weighty document to a shorter 'consumer' style arrangement, but either way it is crucial to all outsourcing relationships as it provides the legal framework between the organizations involved.
In addition to establishing a good contract (continue reading for discussion of what constitutes a 'good' contract), whether it be a traditional or Cloud agreement a key differentiator for success is the structure set up to manage the deal, as this establishes the approach for operating the contract, the interaction between the parties, and ultimately the relationship between the organizations. It is not the length or complexity of the contract that is the key to a successful relationship but the quality of the prior dialogue and resulting understanding of both parties embedded within it.
The Alsbridge definition of a 'good' outsourcing contract is one that is fair and sustainable between supplier and customer, and based on trust and partnership throughout the contracting process and beyond. A contract must stand the test of time; this means it continues to meet both parties' expectations during the lifetime of the contract, not just at the start or at key milestones. This applies to both Cloud and traditional outsourcing contracts. The customer should receive the services and benefits they require, at the right time, while the supplier operates a profitable account and meets its own strategic objectives.
Many customers will continue to contract outsourcing deals as they have done in the past but the really successful organizations will work collaboratively with their partners to move toward Cloud-based services integrated with other traditional 'core' infrastructure. The incumbent service provider has the advantage of knowing the customer organization, the technical architecture and the quick win Cloud services it could implement. The successful service providers will work with their customers to develop their Cloud service offering and be able to develop their market.
This paper defines the key principles for what constitutes a 'good' contract and deal management organization in the current outsourcing landscape and addresses the key challenges for contracts in the future Cloud-based, on-demand IT and business services environment.
