Gerry Pennell, chief information officer for the London 2012 Olympic Games, has said catering for future business needs is the key to success in IT supplier contracts.
A common error many businesses make when setting out IT deals is to write the terms specifically for current circumstances, he said, forgetting to accommodate for future strategic or circumstantial changes.
Pennell, who was until earlier this month chief information officer at bank Co-Operative Financial Services, told delegates at last week’s Forrester Services and Sourcing Forum in London that many businesses were good at “clarifying current requirements”.
But they also often “misalign objectives, not thinking about the different stakeholders or the politics within the organisation, and they forget continuity”, he said.
Additionally, businesses forget to consider the value their long running deals have for their suppliers, he said, warning that this risks alienating suppliers. “You can never assume that any bid is naturally viable economically for the provider,” he said.
Pennell warned delegates at the Forrester Forum that a poorly written contract “can lock the client into an inappropriate service solution”.
Instead, he said, “you have to focus on aligning the two organisations, on rewarding your partner. You can’t underestimate the importance of getting the right level of executive buy-in. And you have to contract for flexibility, agreeing mutual planning cycles.”
The government’s renegotiation of some major contracts was a particularly strong example of poor future planning, he said, warning that it is not worth starting deals before requirements are properly defined.
“I was once involved in a Ministry of Defence project that was going very badly wrong,” he said. “Every time they understood about the requirements, they had to renegotiate.”
Other recent examples of difficult renegotiation not highlighted by Pennell include the £12.7 billion NHS National Programme for IT, which has changed scope dramatically since its inception. The most recent renegotiation, understood to be centred around making the project cater to more local requirements, led to supplier Fujitsu leaving the programme.
In the private sector, broadcaster BSkyB and supplier EDS are awaiting a court verdict on an historic £709 million lawsuit, in which BSkyB alleges EDS fraudulently misrepresented its abilities to build a customer relationship management system. EDS, now owned by HP, argued in court that BSkyB did not know what it wanted from the system, and that the extent and complexity of Sky's requirements "kept on emerging like handkerchiefs from a magician's sleeve".
Businesses would be well advised to better plan for the future, Olympic CIO Pennell said, by becoming closer to their suppliers and engaging in regular productive discussion. “Relationship management is as important as provider selection and contract terms,” he said.
The calls echo comments made last week to Computerworld UK by Procter & Gamble CIO Filippo Passerini, who said the consumer goods giant had dramatically improved supplier discussions.