Why Collaboration Agreements?
Today most organizations have multiple IT service providers as their suppliers to cater to their singular or multiple IT needs. Typically, these providers operate in silos and, as a result, they contribute to lost or reduced focus on overall business service delivery. This, along with many other challenges specific to the multi-supplier ecosystem, resulted in Service Integration and Management (SIAM) being developed as an answer to most of these issues. Service Level Management evolved to have SIAM SLA (Service Level Agreement) as an overarching SLA aligned to the business SLAs. The corresponding supplier SLAs are accordingly harmonized to ensure that business services are delivered in accordance with the commitments made to the business. But this did not eliminate the siloed approach to business service delivery.
IT organizations still face a key challenge that is critical to the success SIAM once it’s adopted – How do we ensure that the suppliers collaborate? The answer is to build a collaborative culture across the organizations’ multi-supplier ecosystem. But how can this be achieved? By establishing ‘Collaboration Agreements’ with each of the suppliers, irrespective of the SIAM model that the organization adopts. Since the word agreement gives a sense of legal liability, it can be also referred to as ‘Commandments of Collaboration’ or ‘Collaboration Principles’.
If the organization is a first-time outsourcer, then things are much simpler as they can build the ‘collaboration terms’ into their supplier contracts. Otherwise, they will have to establish the terms separately. In this case, the retroactive introduction of such terms becomes a demanding task. Unless their contract has a clause regarding contract period modifications in their favor or their supplier is prepared to accept the new clauses readily.
In these kinds of scenarios, it is feasible to establish the terms as part of the legal conditions of the contract. Alternatively, if the legal route is not viable, another option is to agree on ‘principles’. This entails establishing a set of ground rules for collaboration without much legal binding or liability factored in. These types of agreements are referred to as a soft contract.
What are Collaboration Agreements?
When it concerns SIAM, a Collaboration Agreement can be defined as an agreement between the IT organization and its suppliers that they want to collaborate to pursue the organization’s end objective of meeting its business services goals. It can be seen as an unincorporated joint venture as the suppliers need to collaboratively contribute their resources to work towards achieving the end objectives of their customer, the IT organization.
Key clauses in Collaboration Agreements
As discussed earlier on, the content of the collaboration agreement should be guided by the influence the IT organization has on its suppliers. Accordingly, a Collaboration Agreement will contain one or more of the following clauses and may include some others as well.
- Purpose of collaboration – This section will describe the need for the collaboration or indirectly the agreement itself.
- Duration or term of the collaboration – Typically this would be aligned to the original contract period and should simply be a reference to the same (in case of existing contracts with the supplier).
- Human resources to be contributed by each supplier – This section should specify the required human resources-related contributions from each supplier. In case there are specific contributions required for service delivery, governance, etc., such scenarios should be clearly stated or referenced. It should try to eliminate all known or possible areas involving human resources that may result in conflict between the suppliers.
- Financial resources to be contributed by each supplier – This is typically applicable in cases of any financial dependency on business service delivery. Ideally, this aspect should be covered as part of the individual supplier contract but those are mostly limited to the individual services and are not generally linked to the business service. Also, there are scenarios where improvements or innovations, that may not be funded by the IT organization but individually by respective suppliers, may have reward credits. For each of these kinds of scenarios, the financial ownership of respective suppliers should be clearly stated. This will eliminate the possibility of conflicts regarding financial interests.
- Knowledge resources to be contributed by each supplier – Each supplier brings its knowledge to the table specifically to be consumed by the services they provide to their customer. In a multi-supplier ecosystem, there are possibilities of an overlap. The suppliers may be hesitant to share their knowledge resources fearing that the other supplier(s) would stand to benefit from it. This can negatively impact the IT organization they provide their services to. As a result, this becomes a key clause that should specifically state:
- The knowledge resources that the suppliers are expected to contribute
- Ownership of intellectual property (IP) related to the knowledge resources that are brought to the table by the suppliers
- Protection of suppliers’ IP
- Ownership of, and rights to use, IP developed during the contract period – Generally, the ownership of IP of the knowledge resources and other elements built during contract period belongs to the customer. However, this may become detrimental to the development of the IP itself as suppliers become hesitant. Thus, ideally, there must be a joint ownership of all IPs developed during the contract between the IT organization and its suppliers. This section must explicitly state all such elements and scenarios where the IP may reside with IT organization and one or more of its suppliers.
- Rights to patentable inventions discovered during the term of the collaboration – Typically this would be aligned to the above IP clause but ideally this should be stated clearly to avoid any conflicts in the future.
- Management of the collaboration – This section should detail how the IT organization will manage the collaboration either on its own or through SIAM. It should also cover the means through which the suppliers can raise issues such as conflicts or disputes. As well as the method that should be used to address them. It should also carefully detail how compliance to the contract will be measured.
- Confidentiality, non-disclosure and non-circumvention related obligations, both during and after the contract period – If this is in line with the existing contact, then the relevant clause of the existing contract may be referenced. It is a key clause to protect customer data as well as the data contributed by suppliers. This should cover the cross-supplier aspect of data usage, retention, and sharing; this may be an extension to the clause of knowledge resources.
Things that must be taken care of for successful execution of Collaboration Agreements:
- Negotiation of the terms of the contract: Utmost care should be taken to negotiate the terms of collaboration and participation of the suppliers at the outset. This will ensure the right level of supplier buy-in to the terms and will increase the likelihood of contract compliance by the suppliers.
- Transparency: What must happen before, during and at the end of the contract should be discussed openly. The arrangements arrived at jointly must be clearly and carefully documented.
- Compliance with the contract: Ensure that all parties comply with the clauses or obligations contained in the Collaboration Agreement. Evidence of compliance must be recorded and the IT organization must be prepared to enforce its rights if necessary. Contract governance and compliance must be reported as agreed.
About the Author
Sumit K. Jha is an expert in IT strategy, SIAM, ITSM and Transformation. He has transformed & empowered organizations with tools, techniques, and strategies to establish the competitive edge. He heads the Cross Functional Services (CFS) presales function for a leading multi-national IT services provider. He has co-authored a book about SIAM – “Making SIAM Work: Adopting Service Integration & Management For Your Business”. He is an author of “Tackling Roadblocks During IT Implementation” and eBook “ITIL & Cloud Computing – A Glance”. He is a Speaker at various international/national forums and is an honorary member (Industry Expert) of Board of Studies (Faculty of Computer Studies, Symbiosis International University).