Introduction
This whitepaper describes the role of the IT contract manager (hereinafter: contract manager). For this purpose, the main tasks of the contract manager are outlined. It is important to note in advance that these tasks and their scope may vary per company. For example, a small company will more likely have a single contract manager who simultaneously fulfills the role of purchaser. A large company, on the other hand, will have multiple contract managers, each responsible for a defined area of contracts within their portfolio. The sector in which the company operates can also influence the scope of the tasks. For instance, within a government agency or a hospital, contractual provisions regarding the processing of general and sensitive (medical) personal data must be monitored more closely than within a company that manufactures cars. This whitepaper assumes the role of the contract manager within a large financial enterprise (more than 250 employees) consisting of various departments. These include, among others, procurement, legal, finance, security, IT Asset Management, or Software Asset Management, and multiple business departments.

A contract manager is responsible for managing IT contracts between the company and its IT suppliers and service providers. The contract manager acts as a link between different departments and serves as the first point of contact for information regarding the contracts in his portfolio. The core of the role is to ensure that the contractual agreements between both parties are adhered to and that the company derives maximum value from its IT contracts.

Contract Management
The most general and primary task within contract management concerns managing existing contracts. The contract manager monitors contract durations and termination periods, arranges for renewal or termination of the contract, and ensures proper archiving of the contract and related documentation. Examples of such standard documentation include addenda, email correspondence, minutes, purchase orders, and invoices. Outsourced critical IT contracts are subject to more extensive documentation requirements. Examples include a SOC 2 report and (annual) risk assessments.

As soon as the contract manager sees that a contract is about to expire, he initiates the necessary steps. First, he must have a clear view of the contract’s termination period. Suppose the termination period is three months. The contract manager must carefully estimate how much time he will need to make a well-informed decision regarding the possible renewal of the contract. This can easily take several additional months, as he needs to collect information from—and is therefore dependent on—other departments, the supplier, or intermediaries. For example, he must timely have answers to the following questions:

• What are the business’s wishes? Does it want to terminate the contract, renew it one-to-one, or renew it with changes? Is it satisfied with the supplier’s software and services?
• Upon termination: what are the consequences and what is the notice period? Will a new contract be concluded with another supplier for the same product? Or will Software A be replaced by Software B because it now aligns with the company’s vision? Must Software A be removed from all computers? Or will users lose access to the environment in which the software runs?
• Upon one-to-one renewal: is one-to-one renewal even possible, or does the supplier now only sell subscriptions instead of perpetual licenses? What will be the new price of the products? Does price indexation apply? Is there sufficient budget to cover the new price? Are new (general) terms and conditions applicable? Does the new contract comply with new laws and regulations?
• Upon renewal with changes: what must be changed? Can the supplier meet the requested change? Are additional costs involved, or does it result in savings? And what if the supplier cannot meet the business’s request for change?

It is therefore crucial that the contract manager starts on time so that he can make a well-informed decision regarding the renewal or termination of the contract before the notice period expires.

Contract Negotiations
Suppose it becomes clear that a contract must be renewed. The next step is to renew the contract with maximum value for the company and at the most favorable price. The contract manager contacts the supplier to communicate the wishes and discuss any changes. He requests a quotation and shares it with the business and procurement department for review.

If the price in the quotation is too high, further negotiation is necessary. Initially, this can be assigned to the procurement department, as procurement more often negotiates with suppliers when purchasing new products. However, it is the contract manager’s task to clearly communicate the business’s wishes to both the procurement department and the supplier. He may also attend negotiations to discuss these wishes and provide input on modifications to the quotation or supplier offers. This connecting role aligns with another important task of the contract manager: supplier management.

Supplier Management
Good supplier management is crucial for maintaining a long-term relationship with a supplier. A good relationship with a supplier helps, for example, when renewing or concluding new contracts at the best price and establishing clear agreements about performance, availability, and support in Service Level Agreements (SLAs). Good supplier management also assists in resolving issues and holding suppliers accountable for non-compliance with delivered products or services. Additionally, it fosters trust, flexibility, quality improvement of the product or service, and process improvements.

Some critical outsourced services require the relationship between the company and its supplier to be actively maintained through periodic, for example, monthly, meetings. In these meetings, the parties discuss service delivery, future plans, and any issues and how they were or can be resolved. Especially with critical outsourced services, it is necessary that the parties can contact each other quickly and that the agreements in SLAs and escalation procedures are strictly followed. This ensures that the negative impact of downtime of the product or service is minimized as much as possible.

Risk Management and Compliance
Another task of the contract manager is identifying risks in contracts. Examples include unclear agreements or heavy dependence on a supplier (vendor lock-in).

Regarding unclear agreements, the contra proferentem principle generally applies. This principle in contract law means that an unclear clause in an agreement must be interpreted to the detriment of the party who demanded its inclusion in the contract. The principle is strong in agreements between a company and a consumer, where a company almost always drafts the contract provisions.

Its application between two companies (B2B), however, is more restrained than in the company-consumer (B2C) relationship. As a result, in B2B relations, a judge does not immediately interpret the provision in favor of the non-drafting party. It is also in the interest of both parties to reach an extrajudicial agreement in a timely manner about the unclear provision. This strengthens the relationship with the associated benefits described earlier under supplier management.

With regard to vendor lock-in, it is important to be aware when the company is highly dependent on a counterparty. For example, an exit plan or exit strategy can be developed in time in case the relationship between parties deteriorates or the counterparty goes bankrupt. This allows the company to quickly move to an alternative product or other party and ensure business continuity.

Furthermore, it is the contract manager’s task to ensure that contracts (continue to) comply with laws and regulations (compliance), such as the General Data Protection Regulation (GDPR) and, since the beginning of this year, the Digital Operational Resilience Act (DORA). Again, good supplier management makes it easier to reopen and amend contracts during their term in order to comply with (new) laws and regulations.

Cost Control
An essential task of the contract manager is saving costs wherever possible. He does this primarily by negotiating a competitive price with the supplier. However, he can also achieve this by having a clear understanding of the business’s demand. Suppose the business indicates it needs 100 licenses of a certain software because it has renewed for 100 licenses in previous years. The contract manager can ask whether the business has checked if all 100 licenses are actually being used. If not, perhaps 80 licenses will suffice for the upcoming year. Conversely, if the business plans to expand and expects to hire 20 more employees next year, it may be more cost-effective to already purchase 120 licenses now at a discounted bulk rate or higher discount tier. And is a premium subscription really necessary, or will a standard subscription suffice? By asking such questions, the contract manager can contain costs.

The contract manager can also monitor invoicing from the supplier. Is an invoice sent every month for the agreed price, or is an unexpectedly high price suddenly charged? Does a contractor from the supplier suddenly work overtime, or does a supplier send an invoice two years later for a service delivered in the past? It is the contract manager’s responsibility to challenge such costs and make arrangements with the supplier to prevent such costs from recurring in the future. This also benefits the business’s pre-established budgets.

Stakeholder Management and Collaboration with other IT Departments
Finally, the contract manager serves as the first point of contact and acts as a link between various stakeholders and IT departments. Collaboration with IT departments is extremely important to ensure smooth execution of the contract manager’s tasks and daily activities. Suppose the business indicates that a new hardware order must be placed urgently. The contract manager, in his role as the first point of contact, can directly contact (specific colleagues from) the procurement department to place the order on the same day. He can also already contact the finance department to request payment details, so that once budget approval is received, the order can be paid immediately. The contract manager remains transparent with stakeholders and keeps them informed about the placed order, allowing them to adjust their expectations. In doing so, the contract manager actively performs stakeholder management, resulting in greater satisfaction from the business.

The contract manager can also act as a connector between two or more departments. For example, when the finance department indicates that procurement is not following certain processes correctly. The contract manager can act as an arbiter to resolve such issues. He can also choose to facilitate, for example, a biweekly meeting between the business, procurement, and finance departments. In this meeting, current matters can be discussed, such as upcoming contract renewals, urgent orders, or upcoming budget reservation requests. This strengthens predictability and trust between departments, which also benefits the daily work of the contract manager and the satisfaction of the business and its stakeholders.

Conclusion
All in all, the role of the contract manager is to serve as the first point of contact for information about the contracts in his portfolio and to act as a link between different departments and stakeholders. He is primarily responsible for managing IT contracts between the company and its IT suppliers and service providers. To this end, he performs tasks in the areas of contract management, contract negotiations, supplier management, risk management and compliance, cost control, and stakeholder management. The scope of these tasks and responsibilities can vary significantly depending on the size of the company and the sector in which it operates.