Setting Up Appropriate Contract Management Processes: Mastering IT Contract Management - Part 1

For any IT agreement, whether for software-as-a-service, managed IT services, or a software implementation project, contract signing is just the beginning. Maintaining a successful relationship between the customer and the service provider depends on how the IT agreement is managed throughout its lifecycle.

Mastering IT Contract Management: A Five-Part Series outlines how organizations can ensure they realize the value anticipated from their IT agreements—and avoid the many pitfalls along the way.

IT contract management involves overseeing the ongoing relationship between the parties and administering the agreement’s terms, including deadlines, deliverables, responsibilities, and reporting obligations. Its purpose is to ensure each party complies with its obligations while minimizing risks and maximizing long-term value. Some of the most common challenges that undermine contract management, and as a result, performance, and outcomes, are:

• Overly Complex or Lengthy Agreements: Agreements that are unnecessarily long, filled with legal jargon, or  unclear in scope require more time and expertise to manage. For example, a managed services agreement for relatively straight-forward or standard services that exceeds 100 pages  and contains complex performance measures, may lead to misinterpretation and confusion when managing day-to-day performance or addressing service failures.
• Failure to Follow Agreement Terms: Failure to strictly follow agreement terms, which is more likely with a complex contract, may result in waived rights, missed renewal or termination windows, or an inability to assert other contractual rights. For instance, if a customer fails to provide formal notice of a failure to meet a service level within the required time frame, they may forfeit the right to seek service credits or terminate for cause.

These pitfalls can be addressed through thoughtful planning, clear resource allocation, and the use of modern tools. Some key best practices include:

• Right Sizing the Agreement: Draft agreements that are tailored to the complexity and risk profile of the services. A standardized SaaS agreement for low-value tools might be 10–15 pages with pre-approved terms, whereas a $10M IT outsourcing deal warrants a detailed master services agreement with layered documentation and governance structures.
• Allocating Adequate Resources: Effective contract management requires the right people and systems. Complex agreements should be supported by a dedicated team, which might include a contract manager, legal counsel, IT leads, and service provider management. Simpler contracts can often be handled by a sales or procurement lead using legal-approved tools and a checklist approach.
• Using Tools to Support Contract Management: A combination of organizational practices and technologies can significantly improve contract oversight and reduce administrative burdens:
  • Contract Management Manuals: A contract management manual is a user-friendly guide that summarizes the key terms of a specific agreement to help internal teams manage it effectively. Instead of requiring staff to interpret dense legal language, the manual distills critical details—such as service levels, renewal dates, notice periods, and reporting obligations—into clear, actionable information. For example, it might highlight when performance reports are due, how to initiate a change request, or who is responsible for service provider communication. This enables project managers, IT leads, and procurement teams to stay aligned with the contract and avoid compliance issues.
  • Contract Management Software and AI Tools: Contract management platforms can automate workflows, track obligations, and maintain version control, while AI-enhanced tools can go further—summarizing provisions, flagging risk clauses, sending automated reminders for renewals or deliverables, and generating reports to track service provider performance. These tools reduce reliance on manual processes and free up legal and procurement teams for higher-value tasks.

The next part in Mastering IT Contract Management: A Five-Part Series will cover structing effective governance processes in IT agreements.

McCarthy’s Technology Group has extensive regional and national experience advising and representing both customers and service providers in the IT space. Visit our Technology Group page and contact us with any questions or for assistance.