Approach any vendor that asks for an extension or delivers its proposal late with extreme caution, even if the provider was on your mental short list. "The inability to organize resources or meet timelines during the honeymoon period is a clear indication of bigger issues within a vendor," said Ruckman of Sanda Partners.
8. Reciprocal Billing Rights
Through these arrangements, what a vendor really wants is to secure the right to invoice for past charges as long as possible after the charges were actually incurred, while also limiting the window during which the customer can dispute invoices. "As an act of perceptional compromise, they typically offer to make the two sides reciprocal," said Martin of Pace Harmon. "The vendor can invoice for charges for 120 days and the customer can dispute the charges for up to 120 days."
Trouble is, it's not really reciprocal. "The vendor has 100% control over the invoicing process and should have contractual obligations to invoice for all charges as soon as practically possible, generally within 30 days after the charges are incurred," Martin said. "Customers, on the other hand, should have liberal rights to perform invoice audits within conventional timeframes for such activitiesÂgenerally up to at least two years after receipt of the invoiceÂand thereby reserve the right to make good faith disputes long after the invoices have been paid." 9. Premium Staffing
It's relatively easy to benchmark the price per skill in an outsourcing proposal. But what many customers overlook is the level of skills proposed. "A client may leave a lot of value on the table by failing to recognize [an] over-skilled team or a skill pyramid skewed toward high-price resources," said Ross Tisnovsky, a senior vice president at the Everest Group.
Stephanie Overby is regular contributor to CIO.com's IT Outsourcing section.
Read more about outsourcing in CIO's Outsourcing Drilldown.