Successful relationships are built on trust and on mutual understanding. As with marriages, in a long-term IT outsourcing contract, if both parties are not communicating effectively and working together to reach the same objectives, there is a risk that it could all end with a costly and messy break-up.

Attitudes towards outsourcing have evolved over the years. In the early days, it was treated as nothing more than an afterthought, a cost-effective way of maintaining and possibly upgrading an enterprise IT function. But we have experienced significant changes in recent years. Gone are the days of the massive deals, the end-to-end model when entire IT functions were handed over to a single service provider. The reason being that one day companies woke up to the fact that they were no longer in control of key areas of its IT.

Enterprises decided to reduce the risk and switched to the new multi-sourcing model by using multiple vendors. And this has led to the trend towards companies looking for service providers that are focused on a particular industry sector.

In the current economic climate, the need for companies to streamline operations without losing their competitive edge has never been more acute.

With customers looking to reduce costs, and at the same time, transform their organisations, and IT outsourcers looking to secure deals that are commercially viable, how can both parties ensure that the relationship will be a successful one throughout the lifetime of the contract?

Both parties must work hard to set up a solid partnership based on transparency and an agreed roadmap with clear milestones and outcomes reflecting the aspirations of both parties. This must be established during the contract negotiations.

These issues can be addressed provided that the appropriate conversations occur from the outset at the negotiating table and throughout the negotiation of the contract. Tom Higgins, Managing Director, Commercial Solutions Europe at Perot Systems offers advice on how customers and outsourcers can ensure a sustainable long-term relationship from the outset.

Planning for the long-term: a five -step guide to successfully negotiating the best outsourcing deal -

1. Trust and transparency

As companies strive to reduce their costs, take advantage of new technologies and develop long-term IT strategies there is still confusion and lack of transparency when it comes to setting up outsourcing agreements. Trust is paramount in relationships, and there is no room for ambiguity when projects are undertaken.

It may sound clichéd, but the reality is that relationships between customer and outsourcer should be seen as a marriage where both parties are actively working together to ensure continuous, candid two-way dialogue. Failure to maintain the relationship will lead to a lack of trust and eventually result in problems.

2. Setting expectations

From the outset, the customer needs to define clearly what they want from an outsourcing relationship, if this is unclear or expectations are incorrect then the relationship will fail.

Both parties need to look very carefully at the details of the deal that they are signing up to and avoid falling into the trap of entering into an agreement that is based solely on the lowest, price. Contracts based exclusively on aggressive cost reduction can lead to problems further down the line when it becomes apparent that more investment was needed from the outset to achieve the transformation the customer was seeking.

Contractual agreements should be built on the principle that both parties will get something from the arrangement. The customer will gain a resilient partner that will help it to meet its business objectives and the outsourcer will be rewarded appropriately for supporting the customer’s ambition.

3. Joint responsibility

Despite the natural progression from the mega vendors to the smaller focused groups of specialist players that have more understanding of your business and are ultimately easier to manage, outsourcing is not going to transform a business overnight.

Change can be tough in any organisation and both parties have to be firm with each other about what they want out of the relationship. This applies to sharing responsibility for the management and delivery of the project. At the start of an outsourcing deal there is often a graduated level of dependency between the service provider and the customer. To avoid any confusion each party needs to know exactly who is responsible for what. This can be achieved through joint problem solving and a culture of working in collaboration rather than relying on the more traditional supplier-buyer relationship.

4. Good governance

From the customer’s perspective the whole point of entering into a partnership with an outsourcer is to make its business more streamlined so that it is agile enough to react to changes in the market or the business environment.

The outsourcer can make the most of the contract negotiations by applying good governance to really get under the skin of the customer’s organisation. It is one thing to be proficient in technology, but going that one step further by demonstrating a clear understanding of the customer’s business objectives and how to solve the problems it is facing in the market-place or internally is a great way to build trust and establish credibility.

5. Measurement and accountability

Many contracts require constant reassessment otherwise they will be scrapped before they come to fruition. The problems are mainly due to a misalignment of objectives at the start, the inability of the outsourcer to flex with the needs of the customer organisation or a failure to manage progress closely enough.

All too often contracts and deals can be convoluted and sometimes there are just too many SLAs for both sides to track effectively. The evaluation and review process should be scaled down to a more manageable level. The key to successful measurement is to focus on the five or six metrics that really matter during the lifetime of a project. This system will allow both parties to identify any problems should they emerge and make sure that key milestones are reached.

Ultimately introducing more transparency in to IT outsourcing agreements benefits both the customer and the service provider. It is also vital that both parties focus more on the commercial outcomes of deals and not dwell on the contract and the commercial terms.