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IT Contract Management: 4 Keys to Successful Implementation

Contract Basics

When you consider how many business functions take place online these days, it’s no surprise that IT-related contracts are some of the most important to businesses. From video-conferencing with clients to e-commerce to apps that enable key finance and marketing functions, businesses are more reliant than technology than they ever have been in the past.

These days, even a few unexpected minutes of downtime can be incredibly costly. According to one analysis, for a third of companies, just a single hour offline can cost more than $1-million. Fortunately, the delivery of IT services is hardly the Wild West. From your internet provider to IT consultants, contracts are legally-binding roadmaps that detail the services and hardware you are procuring, costs and key terms such as response times in the event of an outage. But as with all other types of contracts, effective contract management is the key to ensuring that you receive the full benefit of your IT-related agreements.

Here are the top four keys to implementing your IT contracts and minimizing the risk of unexpected technology-related costs and problems.

1. Get organized

From cloud providers to managed services vendors to hardware and other equipment, the increasing utilization of technology means businesses have to handle more IT-related contracts than ever before. The most important step to IT contract management – or contract management related to any aspect of your business – is having full visibility and access to all of your agreements so that you don’t waste valuable time searching for information when you need it. The key to this is creating an IT-specific online contract repository, in which you digitize and store all of your IT-related contracts in a single place.

For full visibility into your IT infrastructure, it makes sense to assign these contracts their own directory and structure, separating agreements related to IT service providers, hardware, applications, and other relevant groupings. While text-based search functions can help you to quickly home in on specific information as you need it, having a well-organized repository provides a useful overview of all IT-related contracts.

2. Mind your SLAs

Service level agreements (SLAs) are a component of some IT contracts. These detail your service provider’s obligations to you, outlining everything from network availability and performance to your provider’s response obligations when a problem occurs. As such, these are some of your most crucial IT-related documents and should be handled as such throughout the contract management lifecycle, starting in the drafting period.

Because of the promises laid out within an SLA, it is important that these agreements be highly specific, with measurable performance indicators attached to each obligation. Once your IT contracts are signed, it's crucial the employees responsible for managing technology have full visibility into your SLAs so they can ensure your providers are adhering to the terms. As these responsibilities will likely fall to IT staff, it is key that the right stakeholders have access to SLAs within your contract repository so that they may consult them as needed. Permission-based user roles, in which key individuals are assigned access to specific contracts, are one way to resolve what would seem to be the conflict between centralizing your tech-related contracts and providing the necessary access and visibility. Stakeholders should refer to SLAs both on a regular basis to ensure satisfaction of performance metrics, and also as problems arise to ensure providers respond according to their obligations.

3. Have an evaluation plan

As businesses expand their technology usage and footprints, IT-related costs are taking up a greater share of enterprise budgets. But to make smart IT-related business decisions and prevent unnecessary costs, it’s vital to ensure that you are getting the highest return on your IT-related investments.

This means having a plan for reviewing your IT contracts, both to ensure that your existing agreements are meeting your needs and providing the intended value and to help you make accurate decisions and forecasts moving forward. After all, the faster and more efficiently you can make technology-related business decisions, the better positioned your business will be to innovate.

Some areas that benefit from evaluation plans include:

  • The relationships between hardware, software licenses, and services, which can help you to develop a full picture of the costs and contractual implications of technology-related projects and initiatives.

  • Total Cost of Ownership (TCO), which is an accounting of your total IT environment and infrastructure, information which will inform many technology-related decisions including planning and budgets.

4. Beware of rollover agreements

Some of your IT providers may include auto-renewal clauses within their contracts, which means that if you do not proactively terminate your agreement, they will automatically renew for another term. While there may be occasions within business where rollovers are convenient, the ever-changing nature of technology means that you will likely want to play a more active role in deciding whether to renew an agreement; given the rapid pace of innovation, it may be that your current provider has been outpaced by competitors during the course of your initial contract term, so that their services and/or pricing area no longer cutting edge. There may also be instances where you are unsatisfied with the delivery of goods or services and wish to change providers.

But if you fail to stay on top of auto-renewals, then your company could be held back because you missed a key date and got locked back into an undesirable IT contract. And even if your contracts don’t automatically renew, it’s still important to stay on top of renewal dates so that you have plenty of time to review your contract performance and evaluate the full spectrum of competitive options instead of feeling forced to re-up just because the renewal caught you by surprise.

The Buyer's Guide to Contract Management Software

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