Crafting contracts with escape routes

Two weeks ago we discussed procedures for ensuring that your company gets the best possible telecom contract. Now we'll take a look at some of the clauses that contract should include.

First and foremost, keep in mind your biggest weapon when dealing with carriers is your ability to walk away - without paying a hefty penalty. That means your goal should be to construct a contract with as many "out" clauses as possible. Circuits not provisioned on time? You're gone. Network latency driving your users insane? Hasta.

Even if you have no intention of leaving, a credible departure threat works wonders in obtaining services. A client of mine parlayed a missed circuit install-time into a 40% price decrease for her frame relay WAN.

So what are good "out" clauses? My favorite is the MAD (merger, acquisition, divestiture) clause. If your company is bought, or buys another company, you have the option of renegotiating your contract, or of being assumed under the other company's contract.

Technology re-evaluation is another good one. Let's say you put in an ATM network two years ago to support voice-data convergence . . . but now you'd like to test-drive IP telephony. Your service provider doesn't support it? Time to open up the bid.

Benchmarking is good opportunity for an "out," but be careful: Providers often will propose a best-of-breed clause that says, in effect, "We will compare your terms and conditions to those of comparable customers and adjust to ensure you receive the best terms we offer those customers."

There are two problems with this approach. First, the provider decides who's comparable. Oddly enough, when my clients invoke this clause, they're often told they're unique, so the lower rates that others have obtained don't apply to them.

The second: Service providers will only benchmark you against their customers. That won't help you obtain market-leading terms and conditions. The best way to craft this clause is to build in your right to be benchmarked by a third party, and make sure the third party includes contracts signed by your provider's competitors.

The most effective "out" clauses are those that apply to your service-level agreement (SLA). The catch is crafting an effective SLA requires understanding your business goals and application requirements. What's your definition of "uptime"? For IP services, that might include a functioning DNS. How about "throughput"?

Your answers will vary. However, key metrics you'll want to think about include latency, which affects the performance of interactive applications; jitter (latency variation), which can affect the quality of voice and multimedia services; and available bandwidth. You should also agree upfront on SLA measurement tools (and on whose measurements you'll trust). Finally, you'll need to define escalation procedures for addressing problems.

Johna Till Johnson is senior vice president and CTO for Greenwich Technology Partners, a network consulting firm. She can be reached at johna@greenwichtech.com.

Johnson is senior vice president and CTO for Greenwich Technology Partners, a network consulting and engineering firm. She can be reached at johna@greenwichtech.com.