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11 ways to address RPA and AI in IT outsourcing contracts

Stephanie Overby | Jan. 16, 2017
IT service providers are increasingly using robotic process automation and artificial intelligence capabilities, but their customers may not be reaping the full benefits.

3. Consider new contractual commitments appropriate for RPA and AI.
These may include testing rights or the right to review configurations or coding. “Commitments such as testing are essential to ensuring the desired outcome and avoiding disruptions to the customer’s operations,” Roy says. “Visibility to the configurations and coding is important for the customer’s control of their environment in the course of the outsourcing arrangement—and to manage its exit form that arrangement.”

4. Determining what service levels will be used for RPA- and AI-enabled work or functions.
“Service levels are designed for measuring the quality of a service solutions,” explains Roy. “New service levels may be required when the service solution changes.” Measures appropriate for measuring the effectiveness of manual functions will no longer be suitable. Others may not account for changes in process flows. “This could drive increasingly to transaction- or outcome-based pricing given the lower cost and higher level of predictability and control that automation can bring,” Roy predicts.

5. Revisit pricing to factor in productivity commitments for RPA or AI.
The introduction of RPA or AI capabilitie will take time and cost savings will not be immediate. “The best approach for enabling the customer to realise the promises of cost savings through automation is to build a minimum level of price reductions in the contract based on the provider’s plan for implementing automation,” Roy says “This way, the customer will receive the savings even it the provider is delayed.” That approach also motivates the provider to meet its implementation commitments. “Any new introduction of automation during the course of the agreement should trigger a discussion of additional pricing reductions,” Roy adds.

6. Demand visibility into the use of RPA or AI solutions by providers.
The customer should be involved in—or at the very least be aware of—the introduction of new capabilities. “That will enable the customer to share in the cost savings and to avoid unexpected cost or disruption to its operations on exit from its then current outsourcing arrangement,” explains Roy.

7. Analyse whether the use of RPA and AI software affect compliance with software licenses.
“Third party software, such ERP software, may have restrictions or pricing based a specific number of resources, such as the number of users, that are replaced by RPA or AI software,” Roy says. Licenses may also restrict software’s use with other systems not approved by the licensor.

8. Think through ownership and use rights for RPA and IA solutions and whether such solutions could be managed in-house once deal is done.
Many providers have their own RPA or AI software or configurations that are not generally commercially available. “The question then becomes how the customer manages the risk of unexpected cost or disruption to its operations on exit,” says Roy “In some cases, it may be sufficient for the customer to have RPA configurations specific to the customer’s operations or the databases, algorithms and insights generated by AI solutions [in order] to allow the customer or its replacement provider to recreate similar solutions.”

 

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