Preface: Due principally to COVID-19, NET(net) has been getting many requests from clients for recommendations on how they can reduce or otherwise reshape their IT contracts; particularly their IT Services Agreements.
Insider eBook: Top 5 Ways to Terminate Your IT Services Contract
When it comes to contract wrangling in 2020, the soup du jour has been force majeure, but instead of a ‘silver bullet’ of sorts to get relief from contractual obligations in the age of a global pandemic, many of our clients are learning that the force majeure Rosetta Stone may not be the panacea of bargaining table control they hoped it was.
In most cases where there are stated impacts from customers, suppliers have been willing to make some very small concessions, such as extending payment terms, or in rare cases, even allowing a ‘pause’ of a contract, but by-and-large, unless clients can demonstrate a strong causal relationship of COVID-19 making agreement performance impossible, suppliers have been disruptive to the process of contract reduction (let alone termination) in what seems to be a clear and obvious effort to protect their own self-interests. Furthermore, we are not aware of any cases where our clients have been successful in terminating by way of force majeure, due to COVID-19. Some have tried however, and are still trying today, so the results are not yet conclusive.
As a result of supplier defection, clients have started to consider more aggressive and unilateral measures, including:
- Withholding Payments
- Suspending Performance
- Rescinding Obligations
- Cancelling Projects
- Terminating Agreements
Thus far, the efforts have been significant and the results from these approaches have been mixed at best.
Having said that, there may have never been a better time to re-imagine your supplier contracts than right now, and the willingness and ability to terminate your contract often opens up new channels of dialogue that can lead to creative solutions that often bring suppliers back to the bargaining table to create win-win relationships – ‘IF’ you have a supplier willing to cooperate.
Before you act with the applicable supplier, talk to us about what you’re facing. We have found that an initial review is often helpful to establish the right tone and approach, and often leads to much better results.
In one case, one client was in a very bad situation with their supplier, and we drafted an extremely effective communication that resulted in a complete and total refund of the previous amounts paid, without even an ensuing argument in the response. Our client was extremely happy to be refunded, but also happy that there was no resulting dispute that could have taken a lot of effort from a lot of people to try to resolve. Furthermore, it could have ended up costing them a lot of money in legal fees, and likely would have delayed their project much longer.
NET(net) helps clients all over the world investigate, analyze, price benchmark, source, optimize, contract with, renegotiate with, and manage the performance of technology suppliers. Talk to us today to see how we might be able to help you in your current situation.
To see our Insider eBook where we give you The Top 5 Ways to Terminate Your IT Services Contract (including Pro Tips for each) - Click Here. You can also contact us to speak directly to a Subject Matter Expert to get immediate assistance and answers to your most pressing questions.
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.
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