There are lessons in the case for IT leaders outside of government organizations, as well. At a time when outsourcing customers have been negotiating IT services contracts with fewer, more targeted service levels, "this case says that more performance measures that might reduce a judge's discretion are worth the investment," says Parks. "Customers can't count on the judge or soft concepts like 'material breach' to protect them. There is no substitute for precise performance definitions and careful, prompt management of departures on both sides."
The Indiana-IBM fight also underscores the value of recent shifts in IT outsourcing philosophy--the importance of breaking up big projects into smaller deliverables with measurable results, the appeal of spreading risk across multiple providers, and the importance of robust outsourcing governance.
"Outsourcing is still a hit or miss proposition. The only way to increase the chance of success is to become a truly informed buyer," says Pinto. "This case sends a clear message to the Buyers of outsourced services, that they cannot outsource their responsibility along with the engagement."
Read more about legal in CIO's Legal Drilldown.