The change management process will normally apply where either party proposes any change to the services to be provided under the agreement, which cannot be accommodated by other processes under the agreement. It will usually require the party initiating the change to submit a written request to the other party and then detail the procedure by which the parties will consider the change.

There are a variety of issues that should be considered in any change management process to ensure that it is effective.

Three key areas for consideration are:

  • the need for change impact reports;
  • the pricing principles that will apply to the change; and
  • the service provider’s obligation to undertake the change.

Change impact reports

Before any change request can be properly considered, the customer and the service provider must understand the implications of the proposed change. To facilitate this, the change management process may require the service provider (who will normally be in the best position to assess the likely impact of a change) to prepare an impact report. 

Ideally, the impact report will present a full description of the change, including how the change is to be implemented and to the extent relevant details such as those below may be included in the impact report:

  • the feasibility of the change;
  • the likely effect of the change on the ability of the service provider to meet its obligations under the agreement;
  • any cost implications of the change;
  • any consequential material impact of the change;
  • where appropriate, acceptance testing procedures and acceptance criteria for the proposed change; and
  • any other information likely to be of relevance.

Pricing principles

It is often useful for the change management process to specify how any costs associated with the change will be allocated between the customer and the service provider.

Ordinarily, the customer should be required to pay for a change only to the extent that the change cannot reasonably be considered as within the scope of the existing agreement.

Where a change falls outside the scope of the existing agreement, the change management process may detail the principles that will determine the price to be paid by the customer. For example, the change management process may stipulate that the price for any change should be:

  • reasonable;
  • competitive; and
  • no higher than the price at which a customer would be able to procure similar products or services from another service provider.

The change management process may enable the customer to request the service provider to provide an auditor’s certificate, confirming that the pricing of any change complies with the pricing principles.

Service provider's obligation to undertake the change

An otherwise detailed change management process will be of little value if, even once the price to be paid by the customer has been determined, the service provider can simply refuse to implement the customer’s change request.

Accordingly, the change management process may provide that the supplier cannot unreasonably refuse (either directly or indirectly) a change requested by the customer. Unreasonable grounds for refusing a change might include:

  • demanding unreasonable charges for the change;
  • imposing unreasonable conditions for undertaking the change; or
  • refusing to include the change under the agreement despite the subject matter being reasonably related to or connected with the services.

Summary

Impact reports, pricing principles and the supplier’s obligation to undertake the change are just some of the matters that need to be considered in any change management process to ensure that it is effective. 

A carefully drafted change management process can mean the difference between the system/services that a customer wanted on day one, and the system/services that a customer discovered it needed during the term of the agreement.