Mediation in IT Outsourcing

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Table of Contents

Mediation process
Issues in Mediation
Lessons learned
References

Mediation process

Mediation process is an exercise aimed at bringing two parties into an agreement in an outsourcing deal. Vendors or suppliers of Information technology products and services are made to agree on the terms of their relationship with the organization(s) requiring these services.

This mediation process is usually supported by an expert who will at all times ensure that the parties focus on their main goal of entering into a mutually beneficial outsourcing agreement rather than their differences (Rost, 2006). In the mediation process each party will come up with its terms of references and the mediator will facilitate the negotiation process (Sparrow, 2003).

Negotiations between organizations like Condy software services and WeRunIt is usually very challenging because Condys’ agenda will be profit maximization through high sales while WeRunIt will be aiming at maximum profitability through low cost production.

According to Hale (2005) in most cases parties are in agreement as regards the ultimate formation of the outsourcing relationship but the cost and terms/ conditions of engagements usually bring in contention. It is in here that mediation process brings in sobriety to the parties so that their discussions will be directed towards achievement of their ultimate goals.

Issues in Mediation

The mediation between WeRunIt and Condy software services mainly focused on the contractual price, period and other conditions. The two organizations debated for a long time over the pricing structure and payment frequencies. This was the most contentious issue but finally the parties came to a crunch and an agreement was arrived at.

Condy agreed to take the responsibility of creating and maintaining WeRunIts’ website. It also signed in to put up an e-commerce module in the website to facilitate online payment and maintain databases of entrants to different promotions. Condy was not able to accept the responsibility for supporting accounting systems of WeRunIt since they did not have expertise in the area.

Contractual period and the termination rights were also discussed and both organizations agreed on a five years renewable contract only to be terminated by a five months notice period by either party. Condy actually lobbied for a longer period of time since the initial capital required to roll out the project was high while WeRunIt wanted a shorter contract period so that it could test the competency of the vendor.

The service level agreements were also agreed upon and remedies on cases of downtimes were discussed. WeRunIt actually rooted for an absolute 24 hours a day uptime for the website and e-commerce module but with negations from Condy 2% allowable downtime was agreed to be normal. The service level agreement actually focused more on the quality and reliability of service by Condy software services which WeRunIt was actually assured.

The two parties agreed that ownership of the e-commerce software used would belong to Condy, while the domain name and the web site to WeRunIt. Condy accepted responsibility for the WeRunIt s’ data safety at their premises and therefore it was mandated to ensure that they have proper disaster recovery and back up plans.

Lessons learned

During the mediation several lessons were learned and these includes;

The role of mediator is very challenging and requires a person who is impartial and is able to keep both parties in to discussing relevant issues to the agreement (Greaver, 2000).
Mediation agreements are not the making of the facilitator rather the parties consequently they are more binding and results in an amicable settlement.
In mediation not all the expectations are usually satisfied.

References

Greaver, M., 2000. Strategic outsourcing: a structured approach to outsourcing decisions and initiatives. New York: AMACOM Div American Mgmt Assn.

Hale, J., 2005. Outsourcing training and development: Factors for success. New York: John Wiley and Sons.

Rost, J., 2006. The insider’s guide to outsourcing risks and rewards. New York: CRC Press.

Sparrow, E., 2003. Successful IT outsourcing: From choosing a provider to managing the project. New York: Springer.

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Mediation in IT Outsourcing

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