The closing of a contract between a customer and a supplier is the perfect moment to encapsulate the mutual intentions and goals of both parties. Whether it’s about commodity services or the replacement of a core system, the reciprocal expectations of the supplied services and their benefits should be both explicit and measurable.
However, when it comes to signing the contract, it’s not unusual for people to claim that the specific content of the contract isn’t of significant importance. Everyone wholeheartedly supports what’s been put on paper, yet at the same time people will be aware that at the end of the day it all comes down to the ‘comfortable’ characteristics of the agreement: trust, collaboration, relationship, partnership, compatibility. As for making the partnership succeed, these are generally believed to be the make-or-break aspects. As an effect, the contract’s next destination is the proverbial drawer – only to be picked up again in case of a dispute.
In practice it proves to be difficult to openly discuss affairs that create dissatisfaction. Did we forget to address them? Are we afraid to do so? Are we afraid that that type of attitude is too straight forward? Being open about what can be improved is very important, especially when the intentions are well intended. After all, awareness of the bottlenecks is a necessary if we want to manage them. Both parties benefit from improving the issues!
Depending on context, various types and forms of contracts exist. Equally as many metrics provide insight into what is being delivered. Traditional commodity contracts seldom lead to disagreements, since they often comprise of simple Service Level types of agreements. Custom-made services are more challenging, for the essence of these contracts is to create business value through the partnership. Ideally, such contracts focus on high-level objectives and specific performance-indicators.
Hence, navigating towards a Service Level Agreement is often the easy way out. This form of reporting and managing often transforms from a method into a goal in itself. This is only logical – it is a comfort zone for both the customer and supplier because of its pleasant, tangible nature. However, performing according to the SLA says little about whether or not the joint business goal was achieved, for which both the customer and the custom service supplier bear responsibility. In particular, legacy suppliers find it difficult to commit to business objectives and intentions.
Prior to the collaboration, its objectives and intentions must be crystal clear. The partnership, the contract, and the indicators upon which the interaction is evaluated should be aligned with these objectives and intentions.
My opinion is that a contract shouldn’t be left in a drawer, it must be managed. Although this might sound somewhat old-fashioned and bureaucratic, it simply needs to be done. It can, however, be done in a playful, airy way. You can opt for relaxing, inspiring forms of management and reporting, with a clear common goal. By making it fun and useful, contract management finds its way onto the agenda.
No matter the relationship status between customer and supplier, a contract must be consulted from time to time. Even if it’s just to check whether everyone is still in agreement as to its content, whether it still contains the right metrics, and whether delivered services meet what was agreed upon.