The decision to buy, build, and/or sell information technology assets carries many pitfalls, especially for a regulated utility. After all, information systems developed by, and for, a utility may not only support its operations, but may also be marketed to others in a dynamic and emerging market.
Case #1 (em Unwanted Upgrades
A utility company signs a multiyear outsourcing arrangement for the operation, management, and further development of its customer information services (CIS) system.
A year into the deal, despite a contract containing what the utility thought were clearly stated monthly service costs, the vendor starts sending unanticipated, sizable invoices for further enhancement of the CIS system. Having shifted key expertise in management information systems (MIS) to the vendor, the utility now feels "captive" (em in a weak position to question the bills.
Most problems in outsourcing transactions arise from poorly defined terms. Even if the vendor has committed to contract terms during the bidding process, "surprises" will likely arise if the parties have not adequately defined the scope of the agreement, its level of service, and pricing arrangements.