Posted by: Linda Tucci
CIO, Outsourcing, outsourcing contracts
In our SearchCIO.com tip sheet this week on outsourcing strategies for emerging tech, outsourcing adviser Andy Sealock explains how contracting for new technology is different from procuring traditional IT services. He passed along seven points that his clients at Pace Harmon LLC take into consideration when they’re writing a contract for new IT. Here are two Sealock suggestions for steps you can take in conjunction with the contract to strengthen your outsourcing strategy:
- Take an equity stake in the supplier: “An equity stake changes the dynamic of the relationship,” Sealock said. For one, it allows you to stipulate a certain number of seats on the supplier’s board. In any deal for emerging tech, keeping tabs on your project is critical to its success. “Putting members on their board is about as deep an embedding as you can get,” he said. Second, if the supplier is a startup, your equity stake will be useful.
- Offer co-branding and marketing alliances: Letting a developing tech company put its logo or trademark on your product or on your marketing materials can be extremely valuable (given your wider distribution channels). That in turn helps realize your main aim in the negotiations, Sealock said — namely, to motivate this new tech company to sink its scarce resources into the areas that benefit you most.
Check this blog soon for Sealock’s latest thoughts on calculating total cost of ownership (TCO) on outsourcing deals. Hint: They involve getting engineers to think like finance people and finance people to think like engineers. Guess which group is harder to morph?