For any IT agreement, whether for software-as-a-service, managed IT services, or a software implementation project, contract signing is just the beginning. Maintaining a successful relationship between the customer and the service provider depends on how the IT agreement is managed throughout its lifecycle.
Mastering IT Contract Management: A Five-Part Series outlines how organizations can ensure they realize the value anticipated from their IT agreements—and avoid the many pitfalls along the way.
It is important to note that even with well-managed IT agreements, disputes can arise—whether due to performance issues, scope disagreements, or misaligned expectations. Unfortunately, many organizations are unprepared when these situations escalate. Some of the most common pitfalls include:
- Ignoring Early Warning Signs: Shifts in tone—such as more formal correspondence, references to specific clauses, or repeated missed deadlines—often precede disputes. Overlooking these cues can allow small issues to snowball.
- Poor Documentation Practices: When records of key decisions, change requests, or email threads are missing, it becomes difficult to defend your position. This weakens negotiation leverage and legal options.
- Escalating Too Quickly: Jumping straight to litigation or arbitration can inflame tensions and increase costs. In many cases, the issue could have been resolved through internal escalation.
- Relationship/Service Impairment: Disputes can impede service delivery and lead to irreparable damage to the relationship if clear and effective dispute resolution processes are not in place.
To help mitigate disputes and resolve them more constructively when they arise, customers should consider the following strategies:
- Following a Tiered Escalation Process: All agreements should include a clear process for resolving and escalating issues that sets out what types of issues should be addressed by what level on the customer and service provider side. Typically, the person or team that is closest to the ground (often the operational leads) should be the first to attempt to resolve an issue, and only escalate towards the management and then executive team, when unable to do so. Ensuring there is an opportunity for executives to try and resolve an issue before any formal dispute mechanism – mediation, arbitration, etc. is triggered – can help preserve the business relationship. Getting the right people in the "room" often leads to a solution.
- Minimize Impairment of Service Delivery: The contract should be clear that services should continue during a dispute and a dispute should not be an opportunity for a party to cease performing its contractual obligations to gain leverage in the situation. If a dispute could unavoidably impede delivery of a critical service, consider having a default manner of temporarily resolving the dispute to allow the service to continue pending resolution through the formal dispute resolution process. Additionally, it can be useful to have a special expedited dispute resolution process for certain critical or time-sensitive disputes.
- Preserve Documentation: Encourage teams to maintain clear, dated records of key communications, contract modifications, and service issues. These do not need to be formal legal memos—simple email chains and version-controlled documents can be critical in the event that a dispute cannot be resolved through informal channels.
This is the final part in our Mastering IT Contract Management: A Five-Part Series.
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