IT change programmes can be massively complex, involving multiple suppliers, stakeholders, technologies and commercial arrangements. And if the IT procurement strategy isn’t robust and well planned in advance, costs and timeframes can quickly start to spiral out of control.
In fact, 2022 research from McKinsey and Oxford Global Projects found that IT projects exceeded their budgets by an average of 75%, overran their schedules by 46% and generated 39% less value than predicted. Only one in 200 projects met all three measures of success: delivering the intended benefits on time and within budget.
These findings highlight why effective IT procurement and commercial management matter. Successful IT change isn’t simply about selecting the right technology. Strong technology procurement processes can help organisations align supplier selection, commercial strategy, contracts and technology requirements from the outset, improving the chance of positive outcomes.
What is an IT change programme?
An IT change programme is a coordinated set of projects and activities designed to introduce significant changes to an organisation’s technology, systems, processes or digital capabilities. This could include implementing a new IT service, replacing legacy systems, moving to the cloud, introducing new enterprise software or outsourcing technology services.
For procurement teams, the commercial side of an IT change programme is just as important as the technical implementation. Supplier selection, contract negotiation, scope, pricing, transition, governance and risk management can all influence whether the programme delivers its intended value.
Why does procurement matter in an IT change programme?
IT procurement is sometimes viewed simply as the process of obtaining technology or selecting an IT supplier, but in a major change programme, its role is much broader. Procurement can help an organisation understand the market, assess potential suppliers, develop a commercial strategy and negotiate terms that support the programme’s objectives, and it can also help manage commercial risks throughout the relationship. For example, an apparently attractive supplier proposal may become less valuable if the contract contains unclear pricing mechanisms, insufficient service levels, weak change controls or inadequate exit provisions, which robust procurement processes can help identify and address.
Procurement should therefore be involved early enough to influence the programme rather than being brought in only when a supplier needs to be appointed.
10 tips for successful IT procurement and change programmes
1) Set a clear procurement and negotiation strategy
Before supplier negotiations even begin, it’s vital to establish what the organisation wants to achieve and how it intends to achieve it. This strategy should cover the following:
- The organisation’s business and technology requirements
- Commercial objectives
- The proposed sourcing approach
- The preferred contract structure
- Pricing and charging models
- Key risks
- Non-negotiable requirements
- Areas where there may be scope for compromise
- Decision-making authority
- Escalation routes
- Governance arrangements
- Timescales
A strong IT procurement strategy should also balance cost with factors such as service quality, supplier capability, resilience, security, implementation requirements and long-term value.
Discussing and agreeing on all of these points internally gives the procurement and negotiation team a clear mandate, and reduces the risk of important decisions being made inconsistently during negotiations.
2) Prepare carefully for supplier negotiations
The first meeting can set the tone for the negotiation. It is important that the supplier sees the organisation as knowledgeable, organised and clear about its objectives and authority to negotiate.
This may require senior business stakeholders to provide clear internal backing for the negotiation team, as well as effective preparation beforehand. Everyone involved should understand the organisation’s objectives, negotiating position and authority before discussions begin, and the team should also be clear about which issues can be agreed at working level and which require escalation to senior stakeholders. A well-prepared procurement team is better placed to challenge assumptions, ask informed questions and make decisions throughout a complex IT procurement process.
3) Define and control the scope
Technology requirements can evolve during a programme as stakeholders refine their needs, technical dependencies become clearer or business priorities change. However, uncontrolled scope changes can affect costs, resources, delivery timescales and risk.
The contract should therefore establish a clear process for managing change, defining how proposed changes are requested, assessed, costed, approved, implemented and documented. Pricing mechanisms should also be sufficiently clear and flexible to accommodate legitimate changes without creating unnecessary uncertainty.
Good scope management doesn’t mean preventing change – instead, it means ensuring that changes are commercially assessed and approved before they affect the programme.
4) Separate commercial negotiations from service design
Commercial negotiations can be separated from detailed discussions around service design and transition requirements. This is because commercial negotiations are fundamentally different in terms of attendees, objectives of the parties, outcomes and how the process should be managed.
Service and transition requirements are focused on mutual understanding and documentation of like-for-like requirements, or agreed enhancements managed between the knowledgeable service experts of both parties. Commercial negotiations inevitably require give and take where not every decision will be mutually beneficial.
Keeping these discussions appropriately structured can make negotiations more efficient and prevent commercial decisions from being made without understanding their operational consequences. At the same time, these different workstreams should communicate regularly. A change to the technical scope, for example, may have significant implications for pricing or contractual risk.
5) Set the right pace
The pace of an IT contract negotiation can influence its outcome. Running the process too quickly can result in important details being left unaddressed or only partially resolved. This can create commercial uncertainty after the contract has been signed, particularly where pricing, scope or responsibilities have not been clearly defined. On the other hand, running the process too slowly can result in a lack of focus, often with too few resources being deployed and issues being debated for too long without resolution.
The objective should be a structured process with clear milestones, decision points and escalation routes. Any unresolved issues should be recorded and assigned to an appropriate owner rather than being allowed to disappear into the wider negotiation.
6) Take ownership of the contract
It can be tempting to start the negotiation process with a contract that the supplier already has on the shelf. Whilst this can provide a useful starting point, it may result in a longer negotiation if the supplier’s standard terms do not reflect the customer’s requirements. A contract should provide a practical framework for the relationship rather than simply documenting the supplier’s existing terms.
Taking ownership doesn’t mean the customer necessarily needs to draft every contractual provision itself, as legal advisers and specialist commercial professionals will often have important roles to play. Instead, the procurement team should ensure that the organisation’s requirements are clearly defined and reflected in the contract. This includes areas such as:
- Service requirements
- Pricing
- Service levels
- Governance
- Change control
- Transition
- Risk allocation
- Data and security
- Business continuity
- Performance management
- Exit arrangements
7) Build a robust transition and implementation plan
A properly scoped and negotiated transition schedule is an important part of a successful IT service contract. A good business case can easily be destroyed by a poorly drafted plan with insufficient detail and commercial protections. For complex IT services, the transition schedule should be sufficiently detailed to cover the activities, responsibilities, dependencies and controls required to move into the new service. Depending on the programme, it may cover:
- Transition activities
- Responsibilities
- Dependencies
- Milestones
- Resources
- Testing
- Acceptance criteria
- Knowledge transfer
- Data migration
- Service continuity
- Contingency arrangements
- Transition costs
- Reporting and governance
The transition schedule should also be aligned with the wider programme plan. A supplier may technically meet its contractual obligations whilst the overall programme still fails if dependencies between different workstreams have not been properly managed. Ultimately, a well-designed transition plan provides greater clarity about what needs to happen, who is responsible and how progress will be measured.
8) Communicate with internal stakeholders
If you don’t manage your internal stakeholders, then your supplier will!
An IT change programme may involve procurement, IT, finance, legal, security, operations, project management and senior business stakeholders, all of whom may have different priorities. Regular updates for internal stakeholders, including face-to-face time with senior stakeholders, are essential for ensuring everyone understands the programme’s objectives, progress against milestones, key commercial decisions, emerging risks, decisions that require escalation and the organisation’s position in supplier negotiations. Communication should also be honest; if an issue is likely to affect cost, timing or delivery, it’s generally better to raise it early whilst there’s still an opportunity to address it.
Governance meetings and regular reporting can provide a structured way to maintain alignment, but overall, hard work is required to ensure that a supplier is not able to ‘divide and conquer’.
9) Establish clear roles and governance
Large IT change programmes can involve substantial negotiation teams and numerous internal and external stakeholders. Clear roles and responsibilities help prevent confusion over who can make decisions, who owns specific issues and who is responsible for communicating with the supplier, reducing the risk of disagreements at the negotiating table that can expose weaknesses to the other party.
This governance structure should establish who leads the commercial relationship, who approves changes, who has authority to negotiate, who can escalate issues, which decisions require senior approval and how disagreements are resolved. The negotiation team should also agree how internal discussions are handled, as sensitive commercial positions should always be discussed internally before being presented to the supplier.
A clearly designated negotiation or commercial lead can help maintain a consistent position whilst ensuring that the relevant technical and business specialists contribute to decisions.
10) Identify and manage risk
Over the course of the negotiation, different risks will be identified – including, but not limited to, scope creep, implementation delays, poor supplier performance, service disruption, data security, regulatory compliance, pricing uncertainty, integration problems and weak exit arrangements.
It’s important to document these risks as they occur, with appropriate owners and mitigation actions assigned. Some risks will be mitigated through agreement with the supplier during the drafting process. Where it is not commercially acceptable for the supplier to mitigate a particular risk, it’s important that the risk is considered and accepted through the appropriate internal governance process before the contract is signed.
Having the risks clearly documented and working with internal audit and other governance bodies throughout the process can make the later stages of negotiation and contract approval easier. Considerable time and effort can be spent developing procurement personnel as negotiators, but less attention may be given to equipping those individuals to run large, multi-stage negotiations that extend over multiple months rather than weeks.
Finally, risk management should continue after the contract is signed. Changes to the supplier, technology, business requirements or wider market can introduce new risks throughout the contract lifecycle.
Managing an IT contract after implementation
Signing an IT services contract is not the end of the procurement process. For a multi-year technology service, effective contract management is essential to ensuring that the organisation continues to receive the expected value. Ongoing IT contract management may include:
- Monitoring supplier performance
- Reviewing service levels and KPIs
- Managing risks and issues
- Controlling changes to scope
- Monitoring expenditure
- Maintaining governance arrangements
- Addressing contractual non-compliance
- Identifying opportunities for improvement
- Preparing for renewal or exit
Contract management should also maintain a clear connection between the supplier’s contractual obligations and the wider objectives of the IT change programme. A supplier can meet individual service levels without necessarily delivering the broader business outcomes expected from the programme. Regular reviews should therefore consider both contractual performance and whether the service continues to meet the organisation’s needs.
How technology procurement supports successful IT change
Technology procurement is about more than selecting a supplier at the lowest available price. An effective approach considers the organisation’s requirements, supplier capability, commercial models, implementation risks and long-term value from the outset. Bringing procurement into the process early also provides an opportunity to challenge assumptions and explore the best commercial approach. For example, an organisation may need to consider whether it needs a particular technology, whether it should build or buy a capability, or whether an existing supplier could meet the requirement. This allows procurement to contribute to strategic decision-making rather than simply becoming involved when it’s time to purchase.
Where an IT change programme forms part of a wider procurement transformation, organisations may also need to consider how procurement processes, governance and technology work together. As technology continues to evolve, organisations will need to adapt their systems, services and operating models accordingly. Clear scope, well-structured contracts, robust transition plans, effective governance and ongoing contract management can all help ensure that IT change delivers sustainable commercial value as well as technical capability.
Barkers can help organisations develop and deliver effective technology procurement strategies, from supplier selection and commercial negotiations through to implementation and ongoing contract management. Find out more about Barkers’ technology procurement services and discover how expert procurement support can help your next IT change programme deliver better outcomes.