Crucial Tips for Reviewing UC, Contact Center ContractsCrucial Tips for Reviewing UC, Contact Center Contracts
Switching to the cloud? Learn how to avoid hidden liabilities, vague service level agreements, and penalty clauses in your contract.
June 25, 2020
There’s no doubt that you are or will be considering outsourcing your unified communications and contact center operations to a cloud service in the future, if you haven't already. The cloud service looks appealing, saves money, frees up IT staff for other projects, and is potentially more resilient than your present operation. A downfall, however, is that the contract can have hidden liabilities, vague service level agreements, and penalty clauses that aren’t so attractive.
Below, we’ll have a closer look at elements of a contract review, failures, focuses, challenges, and processes.
Elements of a Contract Review
It’s common for enterprises to review contracts with more emphasis in one area but not all areas equally. The overall review should encompass these three important fields:
Business terms
Technical requirements
Legal risks
The business reviewer may be unaware of the legal issues or technological requirements, and the legal and technical reviewers might assume the other reviewers share their concerns. The result is three sets of reviews that don’t adequately protect the enterprise, and significant issues are missed or fall through the cracks in the review process. All the reviewers must educate each other about their apprehensions and learn to communicate in well understood vocabularies avoiding acronyms and euphemisms.
Where Contracts Fail
A contract can fail in multiple areas. The results delivered by the provider in the agreement should enhance the enterprise’s competitive advantages, not supply the status quo. The contract must possess these five features to achieve a successful outcome:
Act as a framework to deliver a business outcome that satisfies both the enterprise and the provider.
Provide a mutually supportive business arrangement. Both parties must see value in the contract.
Address the risks of both parties and be used to manage the risks.
Use the agreement to enable effective communications between the parties.
Fully cover performance KPIs and governance
Review Challenges
It’s not unusual that an enterprise possibly has more than 100 contract agreements for outside services. Maybe the company didn’t have dedicated resources to review all the contracts effectively. The enterprises could be unaware that some of the contracts are underperforming, especially if the users don’t complain.
Contract reviews are time-consuming and tedious without an obvious cost-benefit. Plus, the reviewers may have limited skills and experience to complete the process.
Providers have their own acceptable contract terms and conditions which they often use and are skewed towards the interest of the supplier. Providers can also change their contracts through hyperlinked documents without notifying customers, and it’s the enterprise’s responsibility to stay compliant.
Where is the Focus of the Contract Review?
Often, reviewers want to focus on the terms and protections related to the consequences of enterprise contract failure. The liabilities imposed on both the enterprise and the providers are usually the maximum concern. Other areas deemed significant but may overshadow performance terms and conditions are failure indemnification, protection of intellectual property, privacy regulation adherence, and confidentiality.
The contract negotiators should focus on more areas that help reduce the possibility of failure. The scope of the contract should be well defined and mutually agreed upon by one another. Your enterprise has business goals that should be addressed and delivered by the contract. What is measured and how the measurements relate to the goals should be understood by both parties.
The market in which the enterprise lives is changing all the time. Sometimes with conditions never envisioned, like COVID-19. Changes in the contract should be planned for and enumerated with what will be the consequences of these changes.
Tracking the Review
The review process takes time and produces labor costs. For all its contracts the enterprise needs to develop a process that reduces the time and costs that can be applied universally to its agreements. Create a checklist and review report format for enterprise contract reviews.
Each contract review shouldn’t require starting from scratch. You want to deliver a result that is uniform for the enterprise. This weeds out inconsistencies and makes it easier for C-level executives to confidently review the contracts and make approval decisions.
Overall, the lack of attention to contract review and monitoring can cost the enterprises more than what was saved by the outsourcing of the UC and contact center operations.
To learn more about cloud contracts and cloud strategy, attend the Enterprise Connect Digital Conference & Expo 2020 taking place online Aug. 3 to 6. On Thursday, Aug. 6, industry analyst Steve Leaden will be presenting the session, "Cloud Contracts: The Good, The Bad The Ugly" from 11:45 a.m. to 12:30 p.m. On Tuesday, Aug. 4, Melissa Swartz will be presenting the session, “Reconsidering Your Cloud Strategy In the Wake of Pandemic” from 11:45 a.m. to 12:30 p.m. Both sessions will conclude with a live chat Q&A; to participate, register now!
