The Difference between a Contract and Real Life: How to Steer a Successful Provider Relationship

After signing a contract, both parties have to protect their own business and value case while they work to achieve a common objective, contractual milestones and specific deliverables. No matter how sound a contract is, what matters in real life is relationship management. Consider the following Top 5 golden rules to avoid pitfalls and create a successful relationship with your service providers … in real life. 

1. Success comes from collaboration. Mirror your project model with the service provider’s organization model for each workstream lead level and sub-workstream lead level. Name a counterpart from the service provider for each in-house project lead position. This pair will serve as a team in making the transformation happen. Ensure both counterparts have common performance objectives with specific personal incentives, and you will benefit from a huge collaborative approach in the journey toward transformation!

2. Build one team. Don’t underestimate the value of personal relationships. Foster informal meetings up front and on an ongoing basis throughout the transformation. Provide for co-seating of each workstream and sufficient cross-workstream alignment to guarantee knowledge transfer over the course of the project. Ensure professional facilitation where required; collaborative platforms like SharePoint are a minimum pre-requisite for success.

3. Separate your operational project team from ongoing commercial negotiations. Discern what matters contractually and what makes sense operationally for each project pair. Stakeholders will spend less time writing and evaluating change requests and be able to focus on the operational objectives and business needs. Use the operational pair as separate subject matter experts to put a voice to what matters in real life. If you blindly follow the contract, you will be significantly less successful in achieving the objectives of your contract.

4. Strengthen your governance team with best-of-breed contract management from day one. Both parties signed a contract, but it’s the daily business of the provider to know the ins and outs of the contract. And if required, the provider will make use of this knowledge. It is your job to know the duties and obligations of your provider. Use a standardized tool like a tracker to anatomize your contract into manageable pieces. Your governance team or a governance services department needs to make sure that you actually receive the savings and efficiencies you signed up for.

5. Don’t forget who the client is. Some providers compare the contract to a marriage. This is a romantic idea but not a helpful one. A strong marriage has two partners on the same level, but in a contract, you need to guide your provider and stay one step ahead. Make sure you have an experienced leadership team and experts that help you assess alternatives, identify potential issues and prepare for the unexpected.

To discuss successful provider relationship management further, contact us.

About the author

Mr. Kimmig is one of ISG’s experts in the area of project management / PMO with a substantial experience of projects in industries like logistics, telecommunication, automotive, financial service, energy & utilities and pharmacies. He advises ISG clients with the required skills and competence in all areas of project management, e.g. the development of a project strategy, selection of project management applications, conception and implementation of a project management framework (organization, processes and tools), assessment of current initiatives / transitions, operative project management and leading PMOs.