5 Important Pitfalls of IT Service Contracts

A 2012 survey by one of those”large 4 consultancies” showed that more than 30% of customers were disappointed with their Service Provider’s performance.

Whilst not all of the issues could be avoided, many can if the Service Contracts were properly reviewed and then subject to a yearly health-check IT Services Vaughan. For example, among the most prevalent issues in IT Service Contracts is finding out that actions that the client expected to be in scope are excluded, abandoned, or are subject to additional charges. That is normally an avoidable matter.

Important Pitfalls of IT Service Review

It isn’t just the consumer of IT Services that suffers when the contract is unclear or has omissions or commercial/operational errors. Oftentimes that the Service Providers themselves are badly impacted through lost revenue, increased prices, very low customer satisfaction, and loss of contract renewals.

Virtually every company has a contract examined for legal integrity and risk minimisation before they sign it. Service Contract Reviews are not a replacement for this – rather they complement the legal inspection by taking into account the functional operational and commercial components that only wide-ranging experience of IT and IT service contracts can provide.

Here are five big drawbacks that could be avoided if the IT services contract is properly worded.

1 Does the contract describe exactly what the client needs or what exactly the service provider generally offers? The largest area of issues within an IT Service Contract is as soon as the customer discovers they are not signed up for what they need. It is essential for the provider and the customer to ensure the client is receiving the services they must have.

2 Does charging start on per month ) a predetermined date or b) when the service is available for use or c) once the customer begins to use the support or d) when one or more landmark events have been achieved? Be certain that the correct criteria for”service commencement” have been clearly described.

3 Is the”fixed price” actually fixed? At least one well known IT Service supplier has a clause within their fixed cost contracts that allows them to stop work when they have used up the estimated variety of times (irrespective of whether the job is completed or not). The customer may then have to pay more than the”fixed cost” to complete the job or the provider is entitled to walk away.

4 Will Be the support criteria and milestones clearly described? The SLO may not be binding.


Number 5 What are the consequences if the Service Levels aren’t satisfied? Camlas Consulting has encounter a number of IT Service Contracts where it was cheaper for the provider to pay a non-performance penalty than to place at the time, energy and money necessary to meet the agreed service levels.

IT service contract reviews should be done through the negotiation process and before contract signing. The whole point of this review is to reduce risk exposure for both the provider and the customer.

Leave a Reply

Your email address will not be published. Required fields are marked *