IT Outsourcing Contracts

IT Outsourcing Contracts: A Legal and Practical Guide

JIMMY DESAI
Copyright Date: 2009
Published by: IT Governance Publishing
Pages: 100
https://www.jstor.org/stable/j.ctt5hh54q
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  • Book Info
    IT Outsourcing Contracts
    Book Description:

    Outsourcing the IT function looks attractive. It can offer you greater flexibility and cost savings, and enable you to focus on your core business. At the same time, outsourcing IT has its problems. It can involve extra risks and hidden costs. Your company’s relationship with the IT supplier will not just run itself. You will need to manage the relationship to obtain the services your business requires. Whether outsourcing your IT is the right decision for you depends on the needs of your business. This is why you should be clear in your own mind what you expect from your IT. That way, if you do decide on outsourcing, you will then be able to find the best supplier. Finding the best supplier of IT services is not just a matter of the cheapest deal. You want to be sure you are using a supplier with real technological expertise who understands the specific requirements of your industry. Because your business relies on IT, negotiating the contract with the supplier is of vital importance. You need to be aware of matters such as liability, data protection and intellectual property. If you want outsourcing IT to work for you, you need to negotiate a contract that takes these issues into account.

    eISBN: 978-1-84928-030-3
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. 1-4)
  2. FOREWORD
    (pp. 5-5)

    This book has been written with the following readers in mind, although others should also find the information useful:

    Chief executive officers

    Managing directors

    Finance directors

    Strategic directors

    Senior management teams

    IT and outsourcing lawyers (both in private practice and in-house)

    Chief information officers and IT directors

    IT consultants

    IT managers

    IT procurement professionals

    IT sales professionals.

    A wide range of industry sectors

    A wide range of industry sectors need IT and many organisations choose to outsource this (for example, banking, pharmaceuticals, travel and insurance companies). This can happen where an organisation outsources its IT payroll needs, its helpdesk and...

  3. PREFACE
    (pp. 6-6)
  4. ABOUT THE AUTHOR
    (pp. 7-7)
  5. ACKNOWLEDGEMENTS
    (pp. 8-8)
  6. Table of Contents
    (pp. 9-10)
  7. INTRODUCTION
    (pp. 11-12)

    This book provides an overview of the IT outsourcing relationship and life cycle. It is written from the perspective of the customer, and so references to ‘you’, ‘your’, ‘your organisation’, ‘the organisation’ or ‘an organisation’, are references to the customer.

    The IT outsourcing process often begins with an organisation considering whether or not IT outsourcing would be of benefit (e.g. outsourcing its payroll systems, certain IT functions or its whole IT department), and then the issues which would need to be considered in order to answer this question accurately, are discussed.

    If an organisation believes that an IT outsourcing deal...

  8. CHAPTER 1: WHY DO ORGANISATIONS CONSIDER IT OUTSOURCING?
    (pp. 13-27)

    IT outsourcing can provide many benefits for your organisation, including cost savings and improved services.

    If you outsource your IT to a third party (e.g. by outsourcing your payroll systems, certain IT functions or your whole IT department), the arrangement between you will take the form of a legally enforceable contract (which will include a service level agreement). The IT outsourcing contract is the umbilical cord between you and your IT supplier in respect of your IT system requirements.

    Therefore, it is vital that your IT outsourcing contract is drafted properly, so that it caters for all of your requirements....

  9. CHAPTER 2: HOW TO CHOOSE AN IT OUTSOURCING SUPPLIER
    (pp. 28-45)

    Having decided to outsource your organisation’s IT function (all, or part of it), you now need to find a supplier. There are many such companies in the market, and they all have unique selling points, so you may find it difficult to decide straightaway which one to choose.

    Most organisations facing this situation have reaped the benefits of careful selection planning. It is not always the case that the biggest global named IT supplier, or the cheapest, will be the right one for your company’s needs.

    The process usually follows various steps, typically (but not always) following a route which...

  10. CHAPTER 3: AGREEING POINTS OF PRINCIPLE
    (pp. 46-52)

    This chapter deals with the essential stage of pinning your IT supplier(s) down to some ‘in principle’ initial commitments.

    This is essential at the early stage of discussions, so that you successfully avoid any unwelcome surprises as the deal progresses. The process takes the form of agreeing key terms.

    Your IT supplier(s) will need to agree to these key terms in principle, in writing and before detailed negotiations begin. If you do this, you will have in place a framework from which you can take comfort that contract negotiations are less likely to be a waste of time and money....

  11. CHAPTER 4: KEY CLAUSES: DEAL BREAKERS, OPTIONS AND WORKAROUNDS
    (pp. 53-70)

    This chapter looks at the sorts of clauses that can often appear in IT contracts, in particular those often referred to as ‘show stoppers’ or ‘deal breakers’.

    Deal breakers are clauses which are the most contentious, and which a party will find unacceptable. These clauses may be so unacceptable that a party may refuse to do the deal at all if they are included. However, the other party may deem that these clauses are vital and must be included.

    The following are some of the most common deal breakers.

    You may recall from Chapter 2 how the price of a...

  12. CHAPTER 5: AGREEING THE IT OUTSOURCING CONTRACT
    (pp. 71-81)

    This chapter looks at preparing, negotiating and agreeing the IT outsourcing contract.

    As the preceding chapters suggest, before you even look at an IT outsourcing contract, it is likely that you will have already done a lot of preparatory work. This will have included scouring the market for suitable IT suppliers, inviting them to submit proposals, meeting and interviewing them, doing further checks on them (such as visiting reference sites and speaking with some of their customers), and agreeing key terms in principle with the two or more IT suppliers that you choose to negotiate with. It is also important...

  13. CHAPTER 6: MANAGING THE RELATIONSHIP: TYPICAL PROBLEMS AND SOLUTIONS
    (pp. 82-89)

    This chapter outlines some of the key ‘bear traps’ to look out for once you have entered into an IT outsourcing contract, and describes how to try and pre-empt conflicts with your IT supplier.

    Changes will normally be required in the outsourcing arrangement for various reasons, including the following:

    Your organisation’s business needs might have changed.

    Your organisation may want its IT support provided in a different (perhaps more cost-effective) way.

    You may no longer need certain services.

    In most IT outsourcing contracts, there is a change request procedure. Most contracts will require changes to be documented for cost, legal...

  14. CHAPTER 7: ENDING THE IT OUTSOURCING RELATIONSHIP
    (pp. 90-94)

    All IT outsourcing arrangements will sooner or later come to an end. This chapter outlines how to manage the end of your IT outsourcing relationship, with as little disruption to your business as possible.

    Chapter 4 described the two fundamental reasons for terminating an IT outsourcing contract (material breach of contract and insolvency of either party); and also outlined possible additional clauses that you, as the customer, may wish to negotiate into your agreement.

    However, terminating your IT outsourcing contract could leave you facing some difficulties. For example, if you terminate the contract for material breach, and there is subsequently...

  15. CHAPTER 8: CONCLUSIONS AND KEY LEARNING POINTS
    (pp. 95-97)

    This short, legal and practical guide to IT outsourcing seeks to offer you some key tips on entering into (and exiting) an IT outsourcing contract, in a way that will save both parties disruption and money.

    Outlined below are the key questions raised in each of the chapters.

    The IT outsourcing contract (including the service level agreement), provides the important bridge between you, the customer, and your IT supplier.

    It is vital that your IT outsourcing contract is drafted properly, so that it caters for all of your generic and individual requirements. Organisations quickly become highly dependent upon their IT...

  16. ITG RESOURCES
    (pp. 98-100)