Assess Contract Terms and Conditions with the OSS Toolkit

Everest Research Institute has created the OSS Toolkit to help buyers evaluate the relative position of the contract by providing insight into the contract terms and conditions.  The OSS Toolkit includes the necessary information for buyers to define opportunities to further balance the positions of the two parties with the contract terms and conditions.

The outsourcing industry has grown exponentially and is expected to continue to expand at a rapid pace.  Outsourcing has many benefits including cost reduction, increased productivity and the opportunity to expand operations.  Many outsourcers have taken advantage of these benefits by contracting with suppliers to perform non-strategic tasks.  To create a profitable relationship with a supplier, a well written contract is crucial.

An agreement that is clear and incorporates fair contract terms and conditions for both the supplier and buyer can lead to a beneficial long-term outsourcing relationship.  An outsourcing deal is doomed to failure if the contract is weak.  When evaluating the contract terms and conditions, it is important to understand what key elements should be included.  Everest Research Institute’s OSS Toolkit provides a summary of key contract terms and conditions, a framework for scoring the relative bias associated with each term to determine if a contract favors one party over the other and suggestions to better balance the contract.

The contract terms and conditions should include the scope of service, performance expectations and security procedures. One of the must crucial elements of the contract terms and conditions has to do with the termination of the agreement.  The buyer and supplier must agree on the grounds for termination.  For example, the termination provision may address termination for cause, termination for convenience, flexibility of termination, change of control and force majeure.  The contract terms and conditions should also cover termination transition assistance.

Everest Research Institute’s OSS Toolkit covers this information and more.  The comprehensive OSS Toolkit goes into great detail regarding the rights of the supplier and the buyer and encompasses the major sections of the contract terms and conditions, such as:

•    Service Scope
•    Service Performance
•    Termination
•    Termination Transition Assistance
•    Governance
•    Rights of Recourse
•    Pricing
•    Intellectual Property

The OSS Toolkit gives buyers the opportunity to rate contracts based on 31 contract terms and conditions provisions on a scale of 0 to 5.  The buyer can assign a weighted score for each section depending on its importance to the organization.  The OSS Toolkit is an Excel-based tool that includes a worksheet for each of the sections of the contract terms and conditions.  As an added benefit, the toolkit incorporates Everest Group’s recommendations on minimum ratings for each provision and gives insights on typical supplier positions and buyer benefits.  Whether a buyer is new to outsourcing or just wants assistance with reviewing existing contract terms and conditions, the OSS Toolkit will provide a way to thoroughly assess the agreement.

Everest Research Institute is a central source of independent and objective strategic intelligence, analysis and actionable insight for the global outsourcing industry.  The Institute provides many valuable products and services to help buyers make better outsourcing decisions.

For more information, call Everest Research Institute at (214) 451-3110 or visit www.everestresearchinstitute.com.