I am not sure why but sales teams write contract for many companies. Contract writing is crucial to understanding the line of responsibility. If it is a standard product offering or SaaS models the contract is straight forward but during customizations and services, it is very much dependent and what the client wants. Since the sales team is near to the customer it is assumed they know what the customer needs and hence they write the contract. The first point of failure. Sales teams have targets to achieve and should stay away from the details to be put in the contract. The commitments made by them needs to be delivered by someone else.
It is also important to ensure that one who writes the contract has prior experience of doing so, else he should just be assisting and not owning it. A loosely worded contract is always harmful for the vendor. No management wants to enter in a legal battle with the customer. But ironically, it is the customer who ultimately suffers delays and financial losses.
I was assisting my manager in writing a contract when he needed an statement of work. Even after explaining him the difference he would not appreciate. Finally after 5 months it all came down when we were ridiculed by the customer for not knowing basic thing.
I need a FIXED PRICE. Managers who take the decision to go fixed priced from day one have a simple assumption i.e. Since it is a platform, it has to be standard and should have been done before and hence the integration vendor should know how much effort it takes. But unfortunately the integration team just knows the product (also not completely) and not your requirements. A fixed priced implementation can be easily sold as a simple remedy to all your budgeting and IT spend forecast issues. However, it is very difficult to manage and practically fails and proves more expensive, if you try doing it before the requirements are finalized and a high level solution design has been approved. As a customer, you to understand the gravity because when a project fails finally you will miss the target.
From a vendor perspective, handling a fixed priced quote is extremely tricky. Scope inclusions and exclusions need to be explicit and thorough. It is best to have an experienced technical manager write the scope. Loosely worded contracts fixed priced projects are bound to be exploited by customers. A statement like "Business would like a system to allow its suppliers to induct product on their own" without any other subsequent rules can lead up to thousands of days of implementation effort.
The only thing you need to watch in time and material contracts is, the quality of resources and their intentions. No human would love to finish work, if he is paid to continue! Effortless reselling makes people greedy and lazy. T&M contracts give you the flexibility to change halfway which is missed in fixed priced implementation but there is a danger of getting lost if you do not exercise control.
Another item that has come up these days is penalty for missing the target. You can never close this correctly and efficiently. The vendor / supplier will find 100s of loop holes in the penalty clause and you will end up spending more money in proving him wrong than recovering from him. Working more cooperatively is a win win situation and always preferred.
Finally, you and only you, as a customer, have to control the project and put it live. Others can only help you but cannot do the job for you.
-v
It is also important to ensure that one who writes the contract has prior experience of doing so, else he should just be assisting and not owning it. A loosely worded contract is always harmful for the vendor. No management wants to enter in a legal battle with the customer. But ironically, it is the customer who ultimately suffers delays and financial losses.
I was assisting my manager in writing a contract when he needed an statement of work. Even after explaining him the difference he would not appreciate. Finally after 5 months it all came down when we were ridiculed by the customer for not knowing basic thing.
I need a FIXED PRICE. Managers who take the decision to go fixed priced from day one have a simple assumption i.e. Since it is a platform, it has to be standard and should have been done before and hence the integration vendor should know how much effort it takes. But unfortunately the integration team just knows the product (also not completely) and not your requirements. A fixed priced implementation can be easily sold as a simple remedy to all your budgeting and IT spend forecast issues. However, it is very difficult to manage and practically fails and proves more expensive, if you try doing it before the requirements are finalized and a high level solution design has been approved. As a customer, you to understand the gravity because when a project fails finally you will miss the target.
From a vendor perspective, handling a fixed priced quote is extremely tricky. Scope inclusions and exclusions need to be explicit and thorough. It is best to have an experienced technical manager write the scope. Loosely worded contracts fixed priced projects are bound to be exploited by customers. A statement like "Business would like a system to allow its suppliers to induct product on their own" without any other subsequent rules can lead up to thousands of days of implementation effort.
The only thing you need to watch in time and material contracts is, the quality of resources and their intentions. No human would love to finish work, if he is paid to continue! Effortless reselling makes people greedy and lazy. T&M contracts give you the flexibility to change halfway which is missed in fixed priced implementation but there is a danger of getting lost if you do not exercise control.
Another item that has come up these days is penalty for missing the target. You can never close this correctly and efficiently. The vendor / supplier will find 100s of loop holes in the penalty clause and you will end up spending more money in proving him wrong than recovering from him. Working more cooperatively is a win win situation and always preferred.
Finally, you and only you, as a customer, have to control the project and put it live. Others can only help you but cannot do the job for you.
-v
No comments:
Post a Comment