The expensive terms: Governance and reporting
In ITO service agreements, certain terms significantly impact the overall contract price. Specifically, requirements regarding governance structure and reporting are key factors that determine the total cost of the service agreement.
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Governance refers to the collaborative organization of processes and decision-making pathways, while reporting covers the supplier’s monthly and quarterly reporting on services provided and SLA compliance.
“If you as a customer have special requirements for governance and/or reporting that go beyond the supplier’s standards, you should expect the agreement to be more expensive.”
Most suppliers can deliver services under market-standard governance and SLA frameworks, typically providing well-defined structures for central governance and clear guidelines for measuring and reporting SLAs.
If your requirements for governance and reporting exceed the supplier’s standard protocols, you should be aware that these additional requirements may increase the cost of the services provided.
This article examines standard versus non-standard contracts and the factors that contribute to supplier risk and the resulting final pricing.
The article is relevant to anyone who works strategically with the procurement of outsourced IT operations services.