A Good Vendor Divorce: Heed the warnings from recent legal cases and business scandals. Before you sign that deal with an IT vendor, make sure you know what you'll do if your supplier doesn't keep its promises

When structuring IT transactions, CIOs and vendors frequently focus more on the positive aspects of the relationship - those areas that will help both parties achieve their business objectives - and less on what would happen if the relationship fails to meet those objectives. At the beginning of a r...

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Bibliographic Details
Published in:CIO 2010-06, Vol.23 (13)
Main Authors: Karlyn, Matthew, Overly, Michael
Format: Article
Language:English
Subjects:
Accountability
Agreements
Chief information officers
Customer relationship management
Customer services
Fees & charges
Flexibility
Information technology
Service level agreements
Strategic management
Suppliers
Vendor supplier relations
Wage & price controls
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Summary:When structuring IT transactions, CIOs and vendors frequently focus more on the positive aspects of the relationship - those areas that will help both parties achieve their business objectives - and less on what would happen if the relationship fails to meet those objectives. At the beginning of a relationship, scenarios such as the supplier going out of business or failing to perform, or a company deciding to change direction, seem so unlikely that many organizations fail to plan for them. However, economic volatility coupled with recent high-profile cases are forcing CIOs and vendors to focus more on protecting themselves through their contracts. CIOs should consider including language in their IT contracts that protect their companies in case a vendor relationship takes an unexpected turn. It's widely accepted that suppliers must bear a significant amount of responsibility for any damages that they cause your business. However, your company should have effective terms in its contracts to ensure that performance issues are solved promptly without the need to terminate the relationship. It may also be appropriate to include requirements for project team continuity, benchmarking and service levels, along with appropriate financial credits for failure to meet the service levels.
ISSN:0894-9301