Forrester Forum: services contracts ‘must have strong foundations and flexibility’

Careful contract management is the basis of a profitable relationship.

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IT services contracts must have several vital elements in order to avoid supplier relationships breaking down, senior delegates have said at the Forrester Services and Sourcing Forum in London.

Sanjiv Somani, managing director offshoring at Swiss investment bank UBS, likened contracts to houses, requiring basic elements to exist.

“In any house, you need a strong foundation, supporting walls and a roof,” he said. “The foundation is the business model that underpins everything you do with your suppliers.”

The supporting walls, he explained, are “talent, cost management, benefiting from time zones, language understanding, and provider selection”.

With regards to talent, it was vital to have the right expertise where and when it is needed, and for cultural and language differences between different teams and individuals to be overcome, he said. Cost decisions are a “balance between what you can pay and satisfying your demands for skill”, he said.

It was vital for firms to select a provider that operates within their own business model, he said, and if appropriate to make use of teams in different parts of the world, so that their in their time zones they can provide constant coverage.

UBS uses providers in Russia, China and Latin America, he said, to offer different services and to be reachable at different times.

Finally, there is “the roof, which brings it all together: the management of change and of the suppliers themselves,” he said.

It is vital to factor in flexibility, he said. “You never know what’s going to happen: you could have a change in management, there could be a change in strategy or even a fundamental alteration of your business model. You need to be prepared for this.”

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