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Page 7 of 8
Management Best Practices
Numerous cases discussing contract management results have yielded a number
of generally agreed-upon best practices across the contract lifecycle. Among
them are the following:
- Define expectations for each vendor and create some type of
measurable SLA. The SLA can range from very simple to very complex, but
it needs to be put into writing and monitored. A good contact is the basis
for a good relationship. It is also important to ensure that the vendor and
internal clients have matching expectations.
- Build key milestones and penalties into the contract. Success or failure
can then be evaluated at various points along the way rather than just
at contract renewal. Milestones might include transition targets, servicelevel
goals, and key rollout dates. Missing these milestones should result in
significant penalties.
- Carefully review the contract. It is important that the contract should be
clear, provide reasonable performance metrics, and meet real business
objectives. The contract also requires legal and accounting review to
ensure that it is aligned with corporate practices, is enforceable, and is
financially reasonable.
- Maintain a dialog with vendors. Working with an outsourcing vendor is
a collaborative effort and requires maintaining good communications.
The contract and services need to be reviewed on at least a quarterly
basis. Many companies have found a "report card" beneficial in gauging
vendor performance.
- Proactively include vendors in technology planning sessions by
soliciting input on necessary upgrades, equipment lifecycles, and new
technologies.
- Let vendors develop their own methods for handling requirements.
Micromanaging is seldom a good idea. The company is, after all, buying
their expertise and experience in handling functions within the contracted
area.
- Develop peer relationships and in-depth understanding between
counterparts in the buyer and supplier organizations.
- Establish a separate entity for handling the outsourcing arrangement,
particularly if it's complex. Establish an upper-level steering committee,
particularly if outsourcing involves core business processes.
- Constantly review the effectiveness and strategic impact of the
relationship.
- Establish some mechanism for internal communications to ensure that all
employees are aware of the details of the relationship. Ensure that there
are avenues for frequent informal communications.
Next: Conclusion
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