How to Structure an IT Management Services Contract

  

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By Howard Podgurski

Before you look at an IT management services contract, know what’s important to your organization and what you need from the relationship with your business management technology provider. 

Consider the past and where you need to go. Too often, the past is affected with one or more of the following problems:

1. Unnecessary and wasteful spending
2. Poor performance or down time at the most critical times
3. Finger pointing between technology providers
4. No single point of accountability for managing all of a company’s technologies.

So, are these things fixable by a contract? Somewhat! By putting the needs requirements in writing, all parties—you and the business management technology provider—clearly understand your responsibilities. If the process doesn’t start with a business and technology assessment, your alarm lights should go off.

Make sure you and the IT provider understand your business and technology requirements. The contract should address the reporting requirements to meet your company’s business needs in addition to any regulatory requirements.

A fixed price contract eliminates unnecessary and wasteful spending. However, too many “what if” clauses in the contract can negate this benefit.  

A contract with clearly defined service level agreements (SLAs) by hours of operation for each application addresses the problems associated with poor performance and down time. 

Contracts should address the issues of information sharing between all of an organization’s technology providers and should define who and how the notification process works. 

Although not necessary, putting an agenda and schedule in writing for management meetings will in the long run eliminate the missteps and miscommunications that are common with outsourced contractors.

Contract length and early termination is another important consideration. Are there any financial benefits to longer-term contracts? Are there reasonable “outs” if your business needs change or there are issues of nonperformance? 

Most of all, your IT managed services contract should be a good faith agreement that has as its goal a mutual investment in success. If you know what’s important to your organization, know what you need from the IT managed services relationship and structure the contract correctly, you will achieve a mutual investment in success.