CONTRACT RISK ASSESSMENT

OVERVIEW

Licensing and contractual clauses often place clients at financial risk and in danger of non-compliance. To address this challenge, ClearEdge has built a focused, dedicated practice to help identify and mitigate potential risks embedded in your supplier contracts. We work with clients to prioritize the suppliers that pose the greatest levels of risk and offer best practices to address these risks before they become costly financial problems.

THE CHALLENGE

Supplier contracts incorporate obscure and confusing language, making it difficult and time-consuming for buyers to comprehend the potential dangers in complex clauses. Furthermore, contracts can exclude language that would otherwise protect customers from risks such as future price increases or requirements during an audit. Given the fast-paced environment in which buyers are forced to work, clauses like these that could open up buyers to enormous risk are often overlooked.


There are numerous events in the lifecycle of a buyer’s organization -- such as a merger/acquisition, data center relocation, leadership change, or cloud migration that can trigger punitive contractual clauses. All of these triggers represent opportunities for an IT supplier to find reasons to extract additional revenue from their customers.

APPROACH

The ClearEdge Contract Risk Assessment (CRA) is a four-step process that finds and addresses areas of risk in key vendor contracts, uncovers the financial impact of the risks, and determines the best paths for clients to optimize their IT spend.

CONTRACT RISK ASSESSMENT

  1. Establish Contract Inventory

  2. Identify Critical Contract Terms

  3. Document Potential Risk Exposure

FINANCIAL IMPACT ANALYSIS

  1. Quantify Financial Impact of Identified Risk

  2. Inspect Entitlement Rights and Assess Current Utilization

  3. Create Committed Spend Model

IT SPEND LEVERAGE PLANNING

  1. Build Supplier-Specific Deal Playbook

  2. Develop Plan to Optimize Spend

DEAL EXECUTION

  1. Execute Plan for First 100 Days

  2. Harness Leverage Tied to Client’s Technology Demand

WANT TO LEARN MORE? 

Check Out Our Webinar Recording

Inspecting Contracts for Risk