From frustration to fulfillment: Flexible IT contracts focus on relationships and your success, not only transactions
Driving rapid business changes, emphasizing the need for adaptability and flexibility in IT business operations, and the terms of your managed IT services contract can give you a competitive edge or see your need to catch up.
It’s time to rethink your service and sourcing strategies for IT. The pace of technological changes requires flexible IT contracts that reduce risks, increase efficiencies, and bring true value. Traditional contracts usually have provisions that make it costly and time-consuming to make any changes.
Rigid contractual provisions can harm your business. They usually contain staffing commitments, technology investment requirements, durations, service level commitments, and a defined strategy. When your business strategy changes, a flexible IT contract changes, so you can respond quickly, capitalizing on opportunities.
Flexible IT contracts have many advantages to companies moving at the speed of business today, including giving them the flexibility in IT business operations they need to succeed. This article discusses the benefits, key features, and best practices of implementing flexible IT contracts.
Why a flexible IT contract? The pitfalls of traditional contracts
During times of disruption and radical change, the speed of response counts. Traditional IT outsourcing contracts are inflexible and pre-defined, hampering your ability to move as quickly as is necessary to create, innovate, and scale.
The issues traditional contracts include:
- A fixed term that makes changing providers both costly and risky
- A pre-defined scope of services that may not meet your future needs and can cause disagreements about whether something is included in the scope
- Geographic scope creates issues with acquisitions and reorganizations
- Lack of flexibility in the volume of services provided
- Minimum revenue commitments
Traditional contracts usually are either framework or fixed-scope agreements. Under a framework agreement, services are pre-defined. Should you want to purchase services outside of that agreement? The contract must be amended through a lengthy and sometimes costly procedure. Fixed-scope agreements show specific services and offer no flexibility.
Your business needs flexibility: Advantages of flexible IT contracts
Outsourcing IT, whether it's for everyday operations or special projects, should make your company more flexible, not less. In the days of yore, businesses would hire an IT-managed services provider when they had a problem the in-house team couldn’t solve. Modern business leaders understand that there’s a lack of available skilled talent, that talent is expensive, and that a flexible IT contract is a wise choice to get the needed skills.
Flexible contracts are also called “relational contracts” because they specify mutual goals and establish governance to keep expectations aligned with principles and processes for collaboration when things change. The word flexible, after all, is defined as capable of bending without breaking, easily modified, and able to change.
Traditional contracts are transactional, not relational, and are thereby more commercial; relationships are at arms-length, and it’s likely it is designed to cover all future events. In contrast, a relational, flexible IT contract is:
- Focused on the relationship
- Sees the relationship as a partnership
- Avoids risk by ensuring continuous calibration of interests
- A fair, balanced, and flexible framework
The word framework is essential here. A flexible IT contract is a framework for an open, collaborative relationship instead of dictating every term.
Benefits of flexible IT contract
You know that trapped feeling. I’m here, I don’t want to be here, but I don’t know how to get out. Flexible IT contracts mean you’re free to request changes, collaborate, communicate, and flexible contracts build trust.
Instead of focusing on the obligations and penalties of traditional contracts, flexible contracts work based on mutual goals. And because of a focus on flexibility, adaptability, and a mutual understanding of expectations, flexible, relational contracts work well for IT- managed services contracts where you buy innovative services from an expert team.
With a flexible IT contract, you:
- Lay a foundation of trust and transparency
- Create a shared vision and goals
- Align interests and expectations
- Stay aligned every step of the way
Traditional contracts have an advantage in that they spell out everything. A flexible contract doesn’t lock you into a set term or a minimum spend, among other things, but there are essential items that you should include in every contract:
- Services - This can be a menu of the full-service offerings since you may need different services at different times.
- The responsibilities of each party
- Expectations around coverage, responsiveness, and issue resolution
- Priorities - What is the process around critical requests?
- Confidentiality agreements
- Fee breakdown
Also included should be termination terms and the final disposition of assets.
Best practices for implementing flexible IT contracts
Perhaps the most critical part of any contractual or otherwise relationship is communication and collaboration. It would help if you considered your IT managed services provider a partner that can free up your current IT staff so they can focus on strategic projects and offer you flexibility in IT business operations.
Implementing IT- managed services under a flexible IT contract means creating a plan for integration and preparing your stakeholder to communicate and collaborate with the IT- managed services provider.
Measuring and monitoring
You can’t gauge success without measurement. This means clearly defining SMART – specific, measurable, achievable, relevant, and time-bound – objectives and KPIs that align with business goals. Of course, consistent quality is one thing to look at, as is reliability and effectiveness.
You’ll want to track progress and performance and have regular feedback sessions based on data collected from scorecards, surveys, and audits. This should be an exchange of feedback rather than a sort of finger-pointing meeting. Once you’ve collected data and given feedback, you’ll want to evaluate the results for the following feedback session.
If you’re considering expanding your team or need specialized technology expertise, Allari offers flexible IT contracts that deliver through collaboration, processes, people, and technology. We have easy- out contracts, open scopes, no fixed fees, no minimum spend. You can scale up and scale down as needed.
We support your effectiveness and efficiency goals by finding savings opportunities, innovative growth initiatives, and automation that increases productivity and customer engagement.
At Allari, we bridge skill gaps with the right people at the right time. Our focus? Effectiveness, efficiency, and great customer experience.
Get started today, and don’t forget to ask about your 20 complimentary hours.