Software Contracts 101: What To Look For - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

CIO Insights & Innovation
Security & Risk Strategy
Team Building & Staffing
IT Strategy
Digital Business
Project Management
Programming Languages
Dr. Dobb's
Enterprise Applications
Operating Systems
Productivity/Collaboration Apps
Network Security
Careers & People
Threat Intelligence
IoT
Attacks & Breaches
Application Security
Cloud Security
Endpoint Security
Mobile Security
Perimeter Security
Risk Management
Operations Security
Analytics
Vulnerabilities & Threats
Security & Risk Strategy
Infrastructure as a Service
Platform as a Service
Software as a Service
Cloud Storage
Data Centers
Mobile Applications
Mobile Devices
Mobile Business
Enterprise Mobility Management
AI/Machine Learning
Big Data Analytics
Hardware/Architectures
Software Platforms
IoT
Networking
Wireless Infrastructure
Data Centers
Cloud Infrastructure
Careers and Certifications
Network Security
Government
Healthcare
Wall Street & Technology
Bank Systems & Technology
Insurance & Technology
Industries
Government
Healthcare
Wall Street & Technology
Bank Systems & Technology
Insurance & Technology
IT Life
Careers
Mobile
Mobile Applications
Mobile Devices
Mobile Business
Enterprise Mobility Management
Software
Enterprise Applications
Operating Systems
Productivity/Collaboration Apps
Comments
Software Contracts 101: What To Look For
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/24/2014 | 10:21:08 AM
Re: In the back office, lots of software, plus lawyers
Thank you for your comment. Yes, usage, whether via number of transactions or number of accounts, is critical, particularly under a service bureau arrangement.  That is why it is vital to monitor your firm's activity, especially as you come close to renewal with a service bureau operator.  Trying to forecast transaction or account growth over even the next three years can be tricky, depending uon whether the firm plans to grow organically or through acquisition.  Of course, that is why some companies operate their core applications in-house as that gives them more control over utilization.

Then, when or if it comes to de-conversion from one service bureau operator and converting to another, that can be a challenge.  The company really needs to have its ducks lined up, because the vendor from which you may be converting will try to extract every last farthing simply to provide conversion files to the new processor. That is why I recommend a company include as part of its initial contract a specific amount or percentage for de-conversion costs in the future.   Bennett

 
cbabcock
50%
50%
cbabcock,
 User Rank: Strategist
1/23/2014 | 6:39:02 PM
In the back office, lots of software, plus lawyers
At one time, Oracle took an aggressive line with customers and conducted a customer audit as the contract approached renewal. If the vendor found in such an audit that usage had been higher than the contract allowed, does the company understand how the vendor arrived at such a conclusion. Does it have its own monitoring tools to challenge the conclusion, if necessary? If it does challenge additional license charges, does that run the risk of running up massive lawyers' bills? Even if there is no case in court, you'd still have to carefully document your information and construct a counter to the vendor's claim, wouldn't you? 
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/21/2014 | 7:40:07 PM
Re: Do CIOs really take software contracts too casually?
I understand your question on the price escalator. On the face of it, it might seem unnecessary.  However, bear in mind that the vendor software support is for a major application or a set of core applications.  And, the vendor will usually require 5-year terms.  After all, the vendor is supporting a critical application for your company and you want to be sure that scheduled maintenance, application upgrades and regulatory changes are promptly and accurately tested and deployed.  That is why it is so important to negotiate all of the software features your company requires: near term and expected in the future, and the level of service (SLAs) you require, with associated penalties if not met.  Bennett
Lorna Garey
50%
50%
Lorna Garey,
 User Rank: Author
1/21/2014 | 6:48:12 PM
Re: Do CIOs really take software contracts too casually?
Is a "price escalator" -- an automatic yearly increase even with a contract in place -- common? That seems like a disincentive to sign on for any length of time. Why not go year to year, so you can shop around?
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/21/2014 | 2:11:35 PM
Re: Do CIOs really take software contracts too casually?
I see that I did not pay sufficient detail to my typing: it should have been "insufficient"  Bennett
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/21/2014 | 2:09:59 PM
Re: Do CIOs really take software contracts too casually?
It is not so much that CIOs (and auditors and CFOs) take software contracts casually, it is more nsufficient attention to the details.  By proper attention and asking detailed questions, a CIO can often extract more beneficial terms, improved SLAs, etc.  Bennett
David F. Carr
50%
50%
David F. Carr,
 User Rank: Author
1/21/2014 | 1:52:44 PM
Do CIOs really take software contracts too casually?
How common is it that CIOs (and others with the authority to sign software contracts) take them too casually? Who really needs to hear this advice?
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/21/2014 | 1:36:36 PM
Re: Size Matters
You raise a good point.  Sometimes you need to look at what the overall strategy is of the vendor software firm.  If yur company is medium-sized market, you can leverage that position, particularly if the vendor is seeking to grow that share of market.  One can offer to be a "poster child" for a vendor if the contract is favorable and the conversion goes well.   Bennett
bquillen280
50%
50%
bquillen280,
 User Rank: Strategist
1/21/2014 | 1:32:45 PM
Re: If contracts don't get you, audits will
Absolutely agree! You have given me an idea for a future article on I/T audits.  I have had some auditors and examiners who actually knew their business and were helpful.  Then again, I have had federal examiners (not the OCC) who did not have a clue.  Bennett
TerryB
50%
50%
TerryB,
 User Rank: Ninja
1/21/2014 | 1:11:21 PM
Size Matters
Absolutely nothing wrong with this advice but you may have trouble executing it unless you have some serious clout. Negotiating with Oracle as GM and doing so as Bob's Auto Supplies are two entirely different things.

I'm still laughing about a Corp purchasing guy we had a few years ago who was trying to consolidate our cell usage across several business units in North America. We decided on AT&T based on coverage, cost, etc. But when came time to sign on dotted line, he decided he wanted AT&T to change some of it's terms and conditions. Anyone care to guess how far that went and who won?
Page 1 / 2   >   >>


State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Download Now!
Editors' Choice
News
IBM Puts Red Hat OpenShift to Work on Sports Data at US Open
Joao-Pierre S. Ruth, Senior Writer,  8/30/2019
Slideshows
IT Careers: 10 Places to Look for Great Developers
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/4/2019
Commentary
Cloud 2.0: A New Era for Public Cloud
Crystal Bedell, Technology Writer,  9/1/2019
Register for InformationWeek Newsletters
Video
Current Issue
Data Science and AI in the Fast Lane
This IT Trend Report will help you gain insight into how quickly and dramatically data science is influencing how enterprises are managed and where they will derive business success. Read the report today!
Download This Issue!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll