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IT contract management

Mastering IT contract management: tips for IT asset management on ServiceNow

Legal reads an IT contract for risk. Only IT can read it for whether the technology will actually work.

NJNitisha JainJun 27, 2021 · 4 min read

Many IT leaders, including chief technology officers, prefer to leave contracts to legal. That hands off approach can undo the work IT put into sourcing and negotiating a deal. Legal counsel reviews a contract for legal risk; IT knows how the technology will be implemented, used and supported, and which terms decide whether it delivers.

Take a common example. A standard software contract may start maintenance fees on signature. But most enterprise software is implemented or customized first, sometimes for months, before anyone uses it. If IT defines go live as acceptance of the final implementation deliverables and starts maintenance from go live, the organization stops paying for support on software it cannot yet use. This guide covers the IT contract types, the terms IT should own, and how IT and legal can work in one workflow on ServiceNow.

What counts as an IT contract?

An IT contract is any agreement in the technology domain or paid from the IT budget: software, cloud services, hardware, maintenance, telecoms and technology services. Most IT organizations manage hundreds of them, and they connect directly to the assets, licenses and services IT runs every day.

What are the most common types of IT contracts?

Nondisclosure agreements

Govern what confidential information each party may share and how it must be protected, often signed early in a sourcing process.

Software license and service agreements

Set out what is licensed, how it may be used, fees, support and service levels, whether the software is cloud based or installed on premises. See key clauses in SaaS contracts.

Hardware purchase and maintenance agreements

Cover specifications, quality checks, delivery, warranty, maintenance schedules and returns.

Statements of work

Define scope, milestones, deliverables, acceptance and rates for services from integrators and consultants, usually under a master agreement. See master service agreement.

Intellectual property licenses

Govern rights to use, modify and own intellectual property, with royalties and restrictions.

Which terms should IT review before signing?

Commercial terms

Purchase price, price increases, discounts and true up rules for licenses. IT knows how usage will grow and should check that the pricing model fits.

Service levels

For cloud and managed services, this is often the most important section: availability, support response and resolution times, maintenance windows and service credits. Many IT contracts include service levels that nobody tracks. Agree how they will be measured and reported before signing.

License metrics and scope

Named users, devices, cores, transactions or revenue. A mismatch between the metric and how you deploy the software causes audit findings and surprise bills.

Implementation, acceptance and go live

Define acceptance criteria and go live, and tie payments and maintenance to them.

Support and maintenance

What is included, versions supported, end of life commitments and upgrade rights.

Data and security

Data ownership, location, security certifications, breach notification and data return at exit.

Term, renewal and exit

Auto renewal, notice periods, termination rights and transition assistance.

Why manage IT contracts on ServiceNow?

IT already manages assets, software licenses, vendors and service requests on ServiceNow. Putting IT contracts on the same platform links each agreement to the assets and services it covers, so asset managers can see entitlements and renewal dates beside deployment data. Contractflow runs natively on ServiceNow: Aavenir AI reviews contracts against your playbook and extracts license metrics, service levels and renewal terms, with a person approving every result. Obligationflow tracks service levels and other commitments after signature. See IT contract management.

What should IT track after signature?

Renewal and notice dates, license usage against entitlement, service level performance and credits owed, price increase dates and caps, and end of support dates. Review them before every renewal so the next negotiation starts from evidence. See IT contract renewals and negotiations.

The bottom line

IT contracts need IT’s review as much as legal’s. Own the commercial terms, service levels, license metrics, acceptance and exit, work in one shared workflow with legal and procurement, and track the terms after signature on the ServiceNow platform IT already runs.

Frequently asked questions (FAQ)

Frequently asked questions

Why should IT review IT contracts?

Legal reviews contracts for legal risk, but IT understands implementation, usage and support. IT should own terms such as service levels, license metrics, acceptance, go live and maintenance start, which decide whether the technology delivers value. See IT contract management.

What are the main types of IT contracts?

Common types are nondisclosure agreements, software license and service agreements, hardware purchase and maintenance agreements, statements of work for services, and intellectual property licenses. Each governs a different part of the technology relationship. Learn about contract types.

How do you track IT contract service levels?

Agree measurement and reporting in the contract, extract the service level terms at signature, assign an owner, compare reported performance with the commitment every period and claim credits when targets are missed. See service credit recovery.

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