What makes an IT supplier relationship succeed – or fail?

At our recent event, Innovate for Impact: Empowering Charities through Technology, panellists explored the challenges organisations face when delivering technology projects and managing relationships with IT suppliers. While the projects discussed varied widely, a number of recurring themes emerged: misaligned expectations, underestimated complexity, supplier dependency and the importance of robust contractual protections.

Catch up on the key takeaways from our other panel sessions:

When expectations diverge – The importance of alignment

A recurring theme throughout the discussion was the danger of misaligned expectations between customer and supplier. This sort of misalignment can result in a dispute ultimately escalating through senior management and formal mediation before the parties reach a negotiated settlement.

Many technology projects begin with enthusiasm and shared objectives. Difficulties often arise, however, when customer requirements prove more complex than anticipated or evolve during delivery. Without a clear and ongoing understanding of project goals, suppliers and customers can gradually find themselves working towards different outcomes.

Effective communication and strong project management are therefore essential. Problems rarely stem from a single issue; they are more often the result of a gradual divergence between expectations and reality.

Understanding the real risks

The panel highlighted that the impact of a failed technology project extends far beyond financial loss. Delays, disruption to services, diverted resources and the need to restart procurement processes can all have significant operational consequences, particularly for charities and mission-driven organisations.

Supplier dependency was another key theme. Whether relying on a long-standing provider or a cloud-based service, organisations should consider what would happen if a supplier ceased trading, withdrew support or could no longer deliver the required service. Panellists highlighted the increasing use of contingency measures such as software escrow arrangements, exit planning and business continuity processes to help manage supplier risk and ensure operational resilience.

Practical tips for managing supplier relationships

To improve project outcomes and reduce the risk of disputes, panellists recommended that organisations:

  • Select suppliers with relevant experience, not just technical capability.
  • Invest in robust contracts, including appropriate liability caps, governance provisions and escalation mechanisms.
  • Build flexibility into project structures so requirements can evolve without derailing delivery.
  • Plan for supplier failure through contingency measures, exit plans and, where appropriate, software escrow arrangements.
  • Look beyond headline cost, recognising that the cheapest option can prove more expensive if delivery issues arise.

Final reflections

The panel ended on an insightful note and advice that successful IT supplier relationships depend on more than technical expertise. They require clear expectations, open communication, effective governance and carefully negotiated contracts. By investing time in these foundations at the outset, organisations can significantly reduce the risk of disputes and improve the likelihood of successful technology outcomes.

If you have any questions about this article, or would like to discuss how to prevent a supplier contract dispute from arising or resolving it if it does, please get in touch.

If you are interested in attending Innovate for Impact next year, you can register your interest here.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further advice.