Master service agreements, purchase agreements, statements of work, service orders, amendments, addendums, and renewal agreements along with any contracting artifacts that define and govern a business relationship between two or more parties are included in the scope of contract management. Consider the following best practices to guide effective and efficiency contract management with your technology vendors.
Best Practice #1: Contract inventory
Maintaining a comprehensive inventory of terms, conditions, pricing, and commitments across all telecom, mobility, and IT vendors is essential. This best practice establishes a single source of truth for contract details required to manage contracts from inception to retirement.
Best Practice #2: Commitment attainment validation
Contracts frequently stipulate that customers must purchase a certain quantity of assets, services, or licenses to receive preferred pricing. Minimum spend and term commitments are other common stipulations. Failure to comply with these commitments often results in financial penalties. Monitoring and validating compliance with commitment attainment provisions enhances financial control and visibility goals.
Best Practice #3: Expiration and renewal tracking
Contracts are effective for a specified timeframe and informed action is required prior to contract expiration. This best practice creates visibility into contract expiration dates by notifying resources responsible for managing renewals, sourcing events, and vendor negotiation. Additionally, completing notifications of intent to renew, renegotiate, extend, or exercise other term provisions is addressed by this practice.
Best Practice #4: Vendor compliance validation
While vendors may proactively report on contract performance, it is a customer best practice to validate vendor performance against all contractual commitments. Compliance results inform and guide vendor management practices.
Best Practice #5: Customer compliance validation
In addition to quantity, spend, and term attainment commitments (Best Practice #2), vendor contracts may require customers to comply with other commitments. Paying invoices, meeting project deadlines, and decision response turnaround times are examples of contractual commitments customers may encounter.