What Happens After the Ink Dries

According to CIO's survey, impediments to innovation include cultural and communications issues, the lack of skills within the supplier, internal resistance and internal budget restraints. But the simplest reason is that innovation was probably never written into the contract in a meaningful and effective way. Once the vendor's sales team and the buyer's procurement group part ways and day-to-day management begins, what the outsourcer is and isn't legally obligated to do suddenly becomes crystal clear. "That person with the strategic vision no longer influences the behaviour of the vendor. The people responsible for the P&L take over and all that great stuff never happens," says outsourcing attorney Hansen.

"Everyone is in such a rush to get these deals done, they end up disappointed because [they] haven't had the right conversations," says Gartner's Anderson. Even if they have had discussions about "innovation" or "transformation", definitions remain fuzzy. "[A vendor] telling you they can provide 'innovative solutions to your business needs' is the same as them telling you they will 'implement your system based on proven methodologies'," says Hansen. "Everyone says it, but it means nothing."

Even if the two sides do come to a consensus about what's meant by innovation, building a contract around those definitions is difficult. At Entergy Nuclear, Smith realized that his hopes for input and innovation from SAIC were never going to happen because they weren't in the contract. "I had a kind of a selfish view of it," says Smith. "Contract be damned, you know, we brought you in here for a reason and that had to do with what else you could bring to the table." The excitement he had about SAIC using its nuclear domain expertise to come up with new ideas for IT faded. "All the talk about how they could show us how to do new things better . . . it never happened," says Smith. "Everyone turned back to the pure utility view."