IT deals based on outcomes

25 May 2009

26 May 2009

IT suppliers have been advised to negotiate outcome-based agreements (OBAs) with buyers more often.

UK technology industry group Intellect unveiled its new guidelines on OBAs this month, after more than a year of research.

OBAs operate when the supplier is contracted to directly achieve business outcomes for and with the customer - rather than provide "inputs, outputs or deliverables".

Launching the document, David Rosewell, consulting practice lead at Fujitsu, said an OBA on (for instance) a ticket sale website could involve tying the agreement to the number of tickets sold rather than the more traditional "output" of simply running an operational website.

Richard Sykes, chairman of Intellect's OBA working group, told SM negotiating the agreements was often a complex process but they could produce better results.

Sykes said procurement of IT services was too often "adversarial" and lacked "partnership building".

Intellect director general John Higgins said OBAs were a "significant evolutionary step" for IT contracting.

"Even more so in a recession, contracts are tighter and meaner as customers look to gain maximum value and effectiveness from their suppliers," said Higgins. "Now is the time for new thinking to solve old problems."

An OGC spokesman said it endorsed the concept of OBAs for complex projects. He said the guidelines were consistent with the principles in the OGC's own A Formula for Success guide, launched in March.

SMmay2009

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