6 tips for renegotiating service contracts

Tight times require a fresh look at existing contracts to see how costs can be curbed or new capabilities can be obtained — but a collaborative ‘win-win’ approach is your best bet.

6 tips for renegotiating service contracts
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The ongoing COVID-19 crisis has compelled IT leaders to consider their costs even as they secure new capabilities to carry their organizations through uncertain times. For this, taking a look at existing service contracts can be beneficial.

“Now is a critical time to get in front of immediate needs and potential long-term changes to IT services contracts,” says Bill Huber, partner in the digital platforms and solutions practice at global technology research and advisory firm ISG. “This is a climate where change is potentially more achievable, and work can commence on restructuring agreements to meet the needs of the next normal.”

There may be opportunities to not only save money on existing contracts but also shift resources and focus to meet changing business needs.

“It’s a great time to be considering renegotiation,” says Brad L. Peterson, partner in the Chicago office of law firm Mayer Brown. “The current situation compels change in some, and it creates opportunity in others. The companies that consider the options now will secure the best deals with the shortest time to benefits realization.”

However, renegotiating service contracts in a time of distress requires finesse. Doing so successfully in a way that works for both the service provider and customers requires some understanding of what’s no longer necessary and what new needs are emerging. It also requires a collaborative approach.

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