Contract Termination: Mastering the Last Resort

Author(s): Refael Keren

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A continuing business trend towards outsourcing has created a greater dependence on vendors. Less control over IT-related functions represents increased risk as even essential activities such as data backup or storage, Web site and application support, and helpdesk are now commonly performed externally. When a vendor's performance slips, the enterprise has little choice but to step in and mitigate potential damage, but contract termination, as a rule, should be a last resort.

Escalate, Renegotiate Before Terminating

Both the vendor and enterprise can each make gains without the other party suffering a loss. If problems arise, the enterprise must first go through the following steps.

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