Governance is the key to successful telecoms contracts.

As a result of poor contract governance, large end-user organisations run the risk of failing to realise the business case benefits envisaged in their outsource or managed service contracts.

Hudson & Yorke believes that successful client/vendor relationships in this business-critical area are built on the foundations of good contract governance.

• Defining and implementing a clear unambiguous governance structure to establish control, communication and decision making forums
• Performing a comprehensive review of contractual obligations to ensure clarity of responsibilities of key stakeholders
• Developing a detailed understanding of service delivery governance to ensure that the principal obligations continue to be met satisfactorily
• Developing a detailed understanding of vendor ecosystem governance to ensure an holistic and seamless end-to-end service for users
• Implementing clear commercial governance to milestones and contractual billing processes
• Creating a contract risk register to identify key risks and mitigation plans
• Proactively managing transition and transformation programmes to maintain high level visibility and control of global contract obligations.
• Implementing a clear communications strategy so all stakeholders can focus on their contributions to achieve the contractual objectives.
• Creating, populating and acting upon a contract governance scorecard to ensure relevant information is available to facilitate effective decision making.
• Performing an objective Mid-Contract Review to step back from the day-to-day operations and assess contract performance

The fundamental focus of contract governance must be to ensure value delivery to the business. Good contract governance should be sensitive to ongoing change within the vendor ecosystem, to fluctuations in demand caused by changes in the business environment and to vendor management requirements during the contract management lifecycle.

"Organisations invest a lot of time and money in executing the strategic sourcing process to procure fit-for-purpose services from best-of-breed vendor(s)" said Harry McDermott, CEO at specialist consultancy Hudson & Yorke, "but all too often the governance effort involved post contract signature is greatly underestimated and as a consequence the end-user organisation does not realise the benefits that were originally envisaged. We advocate that organisations should budget for between 3-7% of the total contract value to govern the contract effectively." Failure to do so can result in value leakage of anything from 17%-40% of the value identified within the Business Case.