How to Renegotiate an Outsourcing Contract

Sitting down with a vendor to renegotiate an existing outsourcing contract can be a challenging task. David Patzwald, CIO of Schneider Electric North America, offers the following suggestions for how to make your negotiation sessions a fruitful—not frustrating—experience.

• Don’t have only IT at the table. Include people from other parts of the business, as close to the top as possible. No matter how much CIOs might wish otherwise, vendors will behave differently when the senior person in the room is from the business side.
• Get blended measures of health. It is important to establish health-of-contract metrics for both financial and emotional satisfaction, and to balance them in the vendor’s mind. When one goal becomes more important than the other—racing to meet product delivery milestones leads to cutting the head of production out of the loop—a contract begins to fail.
• Include vendor input. The CIO should have the final decision when you’re considering whether standing applications or new initiatives should end, but don’t make those decisions without first talking to the vendor who services those projects.