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Signing a new IT deal - the calm before the plunge

Tom Paye | Aug. 21, 2013
Now, more than ever, it's advisable to test the waters before diving straight into a big contract.

"Depending on the scale of the IT partnership, a full-scale commercial and technical due diligence should produce the necessary background checks. Over and above this are the less tangible, but often important aspects, that should also be checked," says Golkar.

That said, the onus is not always on the supplier to ensure a smooth project implantation and a happy contract. There are also internal concerns to address, according to Golkar, who adds, "On the customer/client side, [you need] management buy-in and support, the ability to allocate resources to the project, the ability to clearly define and articulate business requirements, and the ability to participate and make critical decisions in a timely manner. These factors may equally impact the success or failure of a partnership."

This view is shared by Stephan Berner, Managing Director, help AG, who told CNME earlier this year that each side of a partnership needs to set out — in great detail — from the start what a contract will require from each party.

"Set clear expectations, stick to your promises and communicate relevant subjects with the relevant stakeholders," he said. "Customers usually ask for more if the scope of work is not clearly defined. It is in everybody's interest and particular our responsibility to agree on the same at the time of signing the contract. What is in scope, what is out of scope — this is the essential question. If this cannot be answered then suppliers are always in a difficult position and will most probably taken on a ride."

Another issue that can cause headaches further down the road is simply signing up to a contract based solely on price. The experts advise that it's always better to go for the more experienced, highly recommended supplier, rather than one that promises a lot for a fraction of the price. After all, if something seems too good to be true, it probably is.

"The examples are numerous here. Unfortunately, many of these cases quickly turn sour, and, in the long run, a low price may well turn out to be a false economy. Delays, repeat work and ultimately the replacement of an unsuitable partner may cost dearly to the business, especially when time to complete an IT initiative has a direct impact on the business' go-to-market strategy," Golkar explains.

According to many, then, signing a contract shouldn't even be seen as a simple way of sealing a buyer-seller agreement. Instead, it should be viewed as the beginning of a strategic partnership — whereby both parties are deriving maximum value.

"The partnership must be built on a win-win strategy. Often short-term objectives and inappropriate expectations create obstructions in achieving this important goal," says Golkar.

 

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