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IT contracts should be performance related, says Intellect

Karl Flinders

Let the expert suppliers help the business meet its targets through IT rather than dictating how they should do it, IT suppliers say.

IT trade organisation Intellect has launched a guide aimed at helping businesses and suppliers work together to draw up contracts that include business targets for suppliers.

Intellect said because of the recession organisations need to get more out of IT contracts.

The guide to Outcome-Based Agreement (OBA) describes what is required for this type arrangement to work. It also explains the importance of suppliers and businesses working together.

"Traditional contractual agreements operate on an arms-length supply of technology services or products which rarely take into account the performance requirements of the customer," said Intellect. "Across the economy OBAs go beyond just the delivery of products or services and provide a genuine value for money proposition."

Peter Brudenall, partner at law firm Hunton & Williams, said this type of contract can work if customers and suppliers are clear about what they want.

"If the supplier understands where the customer wants to be in a few years and this supplier is sophisticated this works quite well."

He added that the major suppliers prefer this type of arrangement.

This is because they are the experts and can achieve targets in the best way rather than what the customer thinks is the best way. "This is how top tier IT suppliers want to work because they not like being Micro managed and customers can get more out of them if they are more flexible.


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