IT service contracts might bet worth around $900 billion according to Gartner, but contracts behind them are tricky to get right-- and McKinsey & Company shows what goes wrong, and what can one do to win from such relationships.
The analyst examined around 200 live contracts from over 50 companies over the past 3 years. The research shows 60% of contracts lacked well-defined, shared business objectives, leading to an unclear definition of quality of service to both purchasers and providers, as well as limited tracking and control on business and financial targets.
In addition, 90% of contracts had commercial terms and conditions with a "heavy" focus on short-term benefits, with few incentives for joint innovation and limited evidence of such initiatives.
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