This post is primarily for leadership positions.  So much focus goes into designing the current solution, that few think about what will happen at the end of the term.  It is common that a “ramp up” provision is in place for bringing services in, but not so common that there is a “ramp down” provision for when services are being moved off.  Obviously it is not in your provider’s best interest to make it easy for you to move away from their solutions.  One of my clients recently commented on this regarding cloud based services – how easy it is to move services to the cloud but not so easy to move them back.  I’ll have a separate post in the near future on pitfalls to avoid with cloud based services, but regardless of the type of services or solution you are buying, there is a possibility that in a few years there will be a better solution available.

This is one where your IT and Sourcing people need to work together.  It will be important for your IT people to try to anticipate what it will take to “deconstruct”  the solution and implement an alternative.  Your sourcing people will need to make sure that this is factored in.  The danger is that no one gets a pat on the back for avoiding a problem 3-5 years in the future.  And 3-5 years in the future most of the people working on the current solution will be gone.  Leadership can make sure that this has been factored in, and most importantly documented.

Despite popular opinion, a RFP response is not a contract.  Sometimes the pressure to respond quickly and with the best possible solution creates administrative errors.  It is always best to examine the details of their response, item by item, and check the calculations to ensure that proposals are being evaluated in the most accurate way possible.  This holds true even if the error appears to be in your favor.  You may proceed through the RFP evaluation, only to be derailed when the contract is written up and the error is caught, or the contract is executed and the vendor is unable to deliver the agreed to services.  A vendor breach of contract is not really beneficial to your business, especially if it is service affecting.

As more states, counties, and municipalities ban or limit cell phone use while driving, beware the effect on equipment costs.  When California enacted legislation in 2008 the number of bluetooth headsets increased substantially.  This can be a challenge in an enterprise, where users may tolerate a wiped down phone, but usually will not re-use a headset that has been deep in someone else’s ear canal.  There are multiple options for managing those costs.  If you buy through your cell phone provider, it will show up as equipment cost.

When you begin looking at a new deal, one of the areas of concern is usually the revenue or line commitment.  You know that your business is changing all the time.  Are you going to leave money on the table and sign a deal with a lower commitment and lose out on savings or are you going to lock into a higher commitment and risk a shortfall that you will need to pay against?

Most people are petrified of committing to a high number and then paying the “penalty fees”.   Are they really penalties at all?  That is a discussion for another day.  Today though, we are going to look at a technique that can be used to maximize your savings while limiting your exposure.

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How do you know when it is time for a new contract, or to contemplate moving your services to someone else?  Don’t rely on a rough date.  Know your contract.

Many contracts have automatic renewals or specific procedures that must be followed to prevent auto renewal.  Some take it for granted that dates negotiated on their last RFP made it into the contract, this is often not so.  Always check your contracts and know the procedures, dates, and revenue commitments agreed upon.

Some jump the gun and turn the incumbent provider into an enemy before knowing the particulars of how to discontinue their agreement.  It is also important to consider the time and resources necessary to move to another provider.  Know your dates and plan in advance.  Staying one step ahead of your providers will help you to negotiate the best deals.