Assuming that costs savings is the most important factor to consider when evaluating a potential outsourcing arrangement, what do you think is next in importance?  Service Levels?  Innovation?  Greater access to technology?  While I would agree that these are important components of an outsourcing agreement, I would argue that these pale in comparison to building a flexible agreement that holds up over time.

What do I mean by flexibility?  I’m really talking about the mechanisms that allow the contract to withstand the inevitable pressures that will come as a result of business and market changes.  These pressures can include:

1) Changing business priorities
Things that are highly important now from a client perspective may not be nearly as important in the out years.  For example, the original deal may have been constructed to minimize delivery risk and maximize availability.  However, from a business perspective, perhaps the client is now better positioned to accept some risk in return for freeing up dollars/resources/capacity to work on IT activities that add additional business value.

2) Changing prices
Over time, there will be market price changes that are not reflected in the forward cost assumptions built into the deal.  New ways of provisioning and charging for services will continually emerge.

3) Changing services
Over time certain technical platforms (towers) may need to be removed or added.  For example, maybe mainframe services are a part of the original deal and due to a change in the applications portfolio they are no longer needed. 

Building flexibility into a contract is something that an outsourcing advisor such as Alsbridge can help with.  Although you won’t necessarily see a “flexibility” section of the contract, the theme of flexibility is built into typical provisions such as benchmarking, service levels, pricing mechanisms, and termination for convenience. 

What other factors would you consider to be of primary importance when developing an outsourcing agreement?