Four Pitfalls, Four Fixes: Worst and Best Contract Management Practices

Effective management of outsourcing contracts is a critical must-have in today’s enterprise environments. For one thing, complex, multi-vendor sourcing arrangements are becoming ubiquitous, meaning that businesses have to manage more and more contracts on an ongoing basis. In addition, in an increasingly stringent regulatory environment, contracts are a crucial mechanism to maintain transparency and oversight of third-party relationships. Finally, rapid technology innovations are driving continual changes in service delivery models and metrics, changes that require new approaches to contracting.

While executives responsible for sourcing relationships focus close attention on negotiating contract terms and conditions and pricing and on closing the deal, the day-to- ay oversight of details related to service delivery, process efficiency and outcomes often receives limited attention. As a result, operational governance is compromised and business value from outsourcing is sub-optimal.

This ISG white paper examines four common problems related to contract management that arise is sourcing relationships, and four strategies designed to identify and address those problems.