4 Key Steps to a Successful Technology Contract Governance Process
A well-designed contract governance process is an essential tool to effectively manage both your vendor and customer relationships.
It is often overlooked as developing a workable governance process can be a time-consuming project, but with the right visibility and necessary accountability, contract governance ensures the success of a business's relationships, finances, resources, and productivity. It also ensures that the obligations are being met by both parties, services are being supplied, and partners are compliant with all regulations.
If you are considering implementing a contract governance process, here are some key steps to follow in order to build a successful program:
Step One: Assess the current method for managing contracts
As always, the first step to any change is to understand what is in place today. Managing contractual relationships is no different.
Some questions to ask:
Is there a current process? If so, what is it?
What are the current tools being used to store and track existing agreements? (Filing systems, procedures, databases, spreadsheets, etc.)
Is there a centralized model or is each department responsible for managing its own contracts?
These questions help you (1) gain visibility on potential gaps in your current contract governance process, and (2) understand overall compliance with current processes.
If lack of compliance is identified as an issue, understanding the reasons will help you identify useful changes to your current process.
Step Two: Engage Internally
The next step is to engage internally with other departments that have a role in your company’s contracting process, both on the contract formation side (e.g., Legal, Procurement, Sales, and Finance), as well as the contract performance side (e.g., Operations, Client Services).
During this step, the goal is to not only get insight into who has responsibility/authority over contracts in each department and if they comply with your process. But you will also need to get their feedback on their current processes – what works and what doesn’t, does the current process allow them to be responsive to the business, does it get access to the visibility they need to manage the relationships. Most importantly, does the process successfully support the business objectives that are undertaken? (If they do, then you can likely stop reading.)
The questions to ask each of these departments are:
Who oversees maintaining the contracts and meeting obligations?
Is there a process for escalation if contracts are not being properly performed?
How often are contracts being reviewed?
Are the current suppliers and services a good fit for the business?
Step Three: Establish a New Contract Governance Process
Once you have compiled the proper departmental feedback, determining the best method for capturing your contracts into a central repository is beneficial. A central contract repository with useful reporting features will help provide better visibility and flexibility in areas such as renewal dates and obligations from both parties.
Some items to consider when building out a new contract governance process are:
Who is responsible for overseeing the contracts?
How often will the contracts be reviewed?
What tools will be used to manage the contracts on an ongoing basis?
Do we need help from a 3rd party to manage our process?
Numerous other factors exist, but these questions form a baseline that will lead you to fill in the gaps. Remember, the overall question that should be consistently asked is: how do our contracts and governance process effectively support our business?
Step Four: Actively Review Obligations of the Agreements
Once you have established either a new contract governance process or made changes to your current one, performance must be tracked for both parties to ensure the contract's requirements are being met.
This is also the time to review contracts regularly and make changes as needed that fit the needs of both parties. Use this methodology to find best practices, constantly evolving your methodology to enhance results. This may come in the form of additional contract terms, changes to vendor support methodology, or any number of other changes designed to align your contracts with your business and enable your contract to provide flexibility and visibility to adapt to changes to future business requirements.
Serviam’s process is simple.
We listen and assess your unique telecom situation.
We guide you through a custom roadmap to better technological and contractual solutions.
We manage your transition so you have the best possible experience.
We stay with you to make sure your vendors continue to support your ever-changing business requirements.
Our Telecom and IT Vendor Management service goes far beyond managing costs or negotiating contracts. We guide you through a holistic, future-forward telecom strategy for your company and provide you with a long-term partner who manages your vendor relationships so you can focus on the road ahead.