Member Article

Long Term IT Contracts

Long term IT service contracts…Who do they really benefit?

It seems that in modern times many businesses have a fear of commitment – at least when it comes to spending money on long term contracts. Recently many businesses have started to see the value in looking for shorter term service contracts - this enables the client to make sure service levels are maintained and keeps the onus on the provider to avoid getting complacent. It also allows for a business to make short term changes to their business model without worrying about incurring needless financial penalties.

In theory long term IT maintenance agreements should be mutually beneficial for both the client and service provider - these types of contract provide some short and longer term financial benefits for both parties. For the IT provider they reduce customer turnover which can help plan effective engineer resourcing and helps to fund future upgrades to their in-house equipment in line with current technology advances. For the client it removes the need to find new providers at shorter intervals which can lead to breaks in service and the constant need to vet and check new providers which all costs time and money.

In reality long term IT maintenance contracts work mostly for the benefit of the service provider and not the client. One pertinent question to ask here is - what type of service would you receive from a company where you could cancel at any time versus a company with whom you had agreed a 5 year contract? Of course, the service provider can learn a little over time about the abstract needs of a client which always helps to achieve higher customer satisfaction, but in reality all the client wants from their IT system is for it to work and to keep on working with as few service breaks as possible. Support levels and good account management should be maintained from the start of the contract so what additional benefits are there in committing to a long term agreement for the client?

Long term contracts essentially tie in the client for an extended period of time and allow the service company to not worry too much about service levels and customer experience unless it’s at the start or the end of the contract. These contracts in most cases have long cancellation periods – in some cases up to a three month notice period is required before the end of the contract. These contracts and cancellation periods all have one goal, to keep the client from moving to another provider and to make it difficult to look for the services of another company.

In many cases where long agreements are involved service levels often slip and the client simply adjusts their service level expectations over time and accepts they are in contract and have to simply ‘get on with it’. This can lead to apathy over time and this can be transferred to renewal time prompting the client to stick with what they know best even if it isn’t meeting their expectations.

A lot of modern business arrangements aside from the IT and Telecoms market are now taken month to month as all industries become ever more competitive for your business. In turn this allows greater flexibility for business models to evolve and guarantees that service levels need to be constantly maintained. This shifts the emphasis back onto the service provider to understand their client’s needs and to deliver the service that the customer deserves on every interaction and throughout the whole of the working relationship. So how has the IT market managed to maintain this industry narrative?

As someone who works in the IT service industry I am frequently amazed when I hear about two, three or even in some cases five year contracts. I have no idea why companies would tie themselves in to these long contractual terms, even when the providers have performed to a great standard in the past.

Make sure you do a thorough search for a decent IT support company when the time comes. A good place to start is by searching for rolling 30 day IT contract in your area. Good luck…

This was posted in Bdaily's Members' News section by Marcus Sheperia .