How to renew an IT services contract

IT organisations today need to manage an ongoing flow of service contract renewals, and without planning and a consistent approach can often get overwhelmed.

Here are five things to think about when renewing an IT services contract

  • Consider alternatives. As in any negotiation, make sure you have a credible alternative to renewing a contract, which you and your team believe in. That way, you can negotiate effectively from a position of strength and are less likely to make a bad decision. Typically the alternative to renegotiation with an incumbent supplier is to go to market.
  • Give yourself time. It’s easy to end up rolling a contract over as-is because you’ve timed yourself out. Look at the termination and extension conditions of your current contract and plan ahead. Give yourself a realistic timeframe in which to negotiate a renewal, or go out to market if you can't get the terms you want.
  • Take control. Manage the negotiation process. Be clear about what you want, deadlines by which your supplier must come up with an acceptable response.
  • Be balanced. Maintain a balanced view. If the outcome of the negotiation won’t work for both parties, any contract which gets signed will fail.
  • Be focused. Get rid of the emotions. People remember the last thing which was perceived to go wrong with a supplier, rather than taking a step back and thinking about what’s needed for the next few years and focusing on what really needs to be achieved.

If you lack time, band-width or the in-house experience to carry out a negotiation in-house, Kuberos can help. We bring you:

  • Years of experience driving detailed negotiations of contractual and commercial terms for IT services. We prioritise issues to ensure key points are identified and closed out, whilst maintaining pace.
  • A structured negotiation management approach which ensures that stakeholders are engaged at the correct times, that negotiations follow a planned and timely approach, and that decision points and escalations are managed appropriately.
  • Wide knowledge of IT services contracts, allowing supplier offers to be analysed, and areas for improvement identified and negotiated.
  • A methodical approach to contract drafting and commercial analysis.