Fixing the technology contract lifecycle

By Dan Ridge, Practice Lead, Cloud and Infrastructure at Prosource.it

Technology professionals are used to anticipating and solving problems before they cause downtime or user complaints — yet one area often gets ignored, costing companies a lot of money: the management of commercial contracts.

Recognise any of these common issues in your business? 

• Late renewals / not aligned to business requirements.
• Missed opportunities to rationalise, consolidate or renegotiate.
• Wasted spend on duplication or extended support costs for tools that should be retired.
• Missed opportunities to rationalise, consolidate or renegotiate.
• Increased vendor lock-in, especially with long-term deals renewed in haste.
• Compliance and security gaps, when contracts outlast the governance frameworks designed to oversee them.
• Lack of horizon planning 

With so many other things to do, contract management is often more like scrambling. Scrambling to renew before expiration. Scrambling to understand why there are three tools doing the same thing. Scrambling to justify a renewal that has cropped up unexpectedly. And just layer on the complexity of a M&A or working across many countries and you can see how the problem multiplies. 

The cost of undermanagement 

Nobody intentionally ignores the contract lifecycle. But between project deadlines, security incidents, infrastructure changes and cloud migrations, contract oversight tends to slip through the cracks. 

This often means renewals which have no alignment with IT strategy or the broader technology roadmap. Meanwhile budget is wasted on redundant tools and suppliers providing overlapping functionality.  

This is inefficient and can lead to a number of unexpected consequences, such as a tech stack which does not meet the needs of customers. 

Build a better system 

If you recognise some of these issues, you are certainly not alone. But there is better way. Here are some of the principles that can help guide your team to a better set-up for the future: 

1. Accept contract governance is not optional: Establish a governance group and make contract reviews part of your IT operational rhythm, just like patch cycles or release planning. This is where exceptions get flagged, standards get enforced and spend gets justified (or not).
2. Align contracts with your roadmap: Contract timelines should be mapped to your strategic IT plans. Take the time to consider if the contract is still aligned to these aspirations, if not then pause and assess it properly.
3. Assign ownership: Define who owns what. The right governance structure means the consumer requirements are discussed alongside the technology roadmap and software assessment management strategy.
4. Enable transparency: Your contract lifecycle tools should be as strategic as your CRM or monitoring stack. Choose a platform that allows teams across regions and functions to see contract status, ownership, usage data and renewal timing in one place.
5. Simplify wherever possible: Every organisation has a few zombie tools lurking in the shadows. Forgotten about, but still billing. Make rationalisation a constant discussion point to reduce overlap and maximise value. 

And if inter-company cost transfers (ICO) are part of your model, implement a defined process to validate them.  

A proactive contract lifecycle process empowers the team to optimise spend and strategic alignment. It also saves time and enables processes that are compliant with ISO standards and audits. 

It’s time to turn contract lifecycle management into a strategic lever rather than an embarrassing liability.