Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law...
-
Upload
alexander-davis -
Category
Documents
-
view
215 -
download
0
Transcript of Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law...
![Page 1: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/1.jpg)
Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. WeeksAttorney-At-Law
Law Office of Allan Page Weeks
Insert your logo in this areathen delete this text box.
![Page 2: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/2.jpg)
2
Introduction
• Presentation Objectives• APW’s Core IT Contract Negotiation Concepts• Shared IT Transaction Objectives• Customer “Attitudes” That Cause Delay• Vendor Caused Delays• Customer Caused Delays• Customer’s Need To Tailor Standard Vendor’s
Contract (“War Stories”)• The Lawyers Caused The Delays
![Page 3: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/3.jpg)
3
Presentation Objectives• The program description highlights the tension
between:– Desire of both parties to quickly conclude an IT
transaction, which seldom happens;– Customer’s perceived need to adapt the Vendor’s
standard form contract’s terms to a particular transaction; and,
– Vendor’s intention to use a standard form of IT agreement that should only be minimally altered.
• Presentation focuses on the Life Science Customer’s perceptions, biases, experiences and procedures about IT contract negotiations that are too long.
![Page 4: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/4.jpg)
4
APW’s Core IT ContractNegotiation Concepts
• Operating Agreements
• Construction Contracts
• Competing Business Models
• Outsourcing Contracts
• Lawyer’s Proper Role
![Page 5: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/5.jpg)
5
Operating Agreements
• IT product and services contracts are operating agreements.
• Requires careful attention to:– who will use the IT products;– where will they be used;– the functions performed by those products and
services;– what is the output from their application; and,– especially for database licenses, who owns what part
of the output.
![Page 6: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/6.jpg)
6
Construction Contracts
• IT contracts, particularly those with a significant services component, such as software development, software customization and systems integration contracts, are similar to construction projects/contracts, with a major distinction—there may not be an alternative Vendor or IT product for the project.
• Primary Customer leverage is achieved by building in milestone testing and payment events.
![Page 7: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/7.jpg)
7
Competing Business Models
• Vendor’s software license and other IT contracts reflect the Vendor’s business model for the license/sale of its product and any associated services.
• Customer needs an IT contract that matches the end-user’s business model for the IT products and services that are being acquired.
• Protracted negotiations about the legal or business terms of a software license often arise because the Vendor’s license bears little resemblance to the Customer’s business model for its use of the software.
![Page 8: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/8.jpg)
8
Outsourcing Contracts
• Web-enabled access to various IT applications, as well as software hosting, means that many IT contracts are actually outsourcing agreements.
• The use of third party services leads to additional and complex negotiations about the third party’s control of the Customer’s operational responsibilities.
![Page 9: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/9.jpg)
9
Lawyer’s Proper Role
• Customer’s lawyer should assure that:– the final IT contract is both legally sufficient
and appropriately protective of the Customer’s interests; and,
– the end-user(s) will be able to utilize the IT products (e.g., software or a database) in the manner expected when the IT project was authorized.
![Page 10: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/10.jpg)
10
Shared IT Transaction Objectives
• Customers and Vendors usually want:– the IT contract signed as soon as possible;– the amount of money to be paid and received
by each party to be within their reasonable expectations; and,
– at contract signing, a sense of mutual satisfaction on each side of the table.
![Page 11: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/11.jpg)
11
Customer AttitudesThat Cause Delays
• Life Sciences personnel may not understand the important differences between an IT transaction and the more collegial collaboration agreements utilized for drug discovery and development.
• Too much or too little trust in IT Vendors.• Lack of familiarity with the computer industry and the
manner in which it sells IT products/services and negotiates its contracts.
• Risk allocation between a Customer and Vendor may seem unfair and/or over-reaching.
• Computer industry’s well-deserved reputation for over-promising product performance and project completion dates.
![Page 12: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/12.jpg)
12
Vendor Caused Delays
• Submission of a contract that is too Vendor-biased.• Negotiations handled by personnel not appropriately
knowledgeable about IT transactions. • The failure to be forthcoming in response to Customer’s
questions, due to a desire to protect the sale. • Desire to avoid or postpone detailed contract
discussions, to keep the sale on track.• If a database license is involved, a failure to understand
the differences between a software license and a database license, particularly with respect to output ownership and post-contract retention matters.
![Page 13: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/13.jpg)
13
Customer Caused Delays
• Failure to clearly communicate or define project requirements.
• Complicated and slow internal decision hierarchy. • Lack of experience with IT contracts and their
negotiation.• Changes in operational needs or corporate policies that
affect the process of negotiating the contract.• Failure to involve knowledgeable persons early enough
in the procurement process, e.g., IT and legal.• If a database license is involved, a failure to understand
the differences between a software license and a database license, particularly with respect to output ownership and post-contract retention matters.
![Page 14: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/14.jpg)
14
Customer’s Need to TailorVendor’s Standard Contract – “War Stories”
• License grant would not permit the software to be utilized as expected.
• The output from processing a database could not be retained by the Customer if the database/software license was terminated.
• The centralized management of the software “keys” needed by the Customer was not permitted by the Vendor’s business model.
• The Vendor would not support software updates or new releases beyond the most recent release.
• The contract submitted by the Vendor’s sales person was not applicable to the transaction.
• The contract between the Vendor of outsourced software hosting and the vendor to which that Vendor had outsourced those services did not match the performance terms (i.e., SLA’s) in the proposed agreement between the Vendor and the Customer.
• Neither party understood the Customer’s corporate structure, resulting in an inaccurate identification of end-users and an incomplete license grant.
![Page 15: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/15.jpg)
15
The Lawyers Caused The Delays
• The Vendor’s contract was not submitted by the Vendor until relatively late in the procurement process.
• The responsible Customer personnel did not send the contract for legal review until the last minute.
• The contract was sent to the lawyer(s) on a timely basis, but the IT transaction was not considered to be a priority.
![Page 16: Evaluating And Negotiating An IT Contract — The Buyer’s View Allan P. Weeks Attorney-At-Law Law Office of Allan Page Weeks Insert your logo in this area.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649d745503460f94a53e8c/html5/thumbnails/16.jpg)
16
For more information, contact:
Allan P. Weeks Law Office of Allan Page Weeks 183 State Street, Suite 4B Boston, Massachusetts 02109
Tel: 617/725-0222Cell: 617/304-4542E-Mail: [email protected]