Going about buying an IT Solution?
In the early stages of a business, it is all hands to the pumps; every hand to every pump. As the orders come in how do you manage the increase in business without adding extra people and extra cost simply to manage the day to day admin?
Buying IT solutions is one way to help. What are the benefits of such solutions?
- Standardising your processes; one way of doing things. It simplifies administration, helps keep costs down, makes sure your processes are repeatable and therefore more efficient
- Accurate record keeping
- Enabling you to keep track of things – from sales to inventory, from overdue accounts to upcoming payables; often all in one place
But getting engaged with a new supplier, an expert in their field is a new experience – and it can be a daunting one. When engaging a third party specialist to deliver a system what are the key things to think about in your agreement? How do you make sure that you are protected, don’t get “change controlled” to death and don’t end up paying for something that doesn’t work for your business?
Some quick tips
Here are some points to think about in your contract with your supplier.
What do I want the solution to do?
Make sure that the solution meets your needs – it is your and not the supplier’s responsibility to make sure the solution does what you want it to. Write down the requirements clearly in the agreement. If the specification is not clear, you may end up having to pay more through change control – likely to be at extra cost to you.
How do I avoid getting tied up in “IT knots”?
Try to keep your solution simple and standard – and if possible use off the shelf rather than bespoke solutions. Ending up having a complex bespoke solution is likely to cost you more over the long term, not only in terms of IT costs and support, but also in costs within your own business. This also helps in keeping the costs down and avoids problems of costly development and the risk of “change management” above.
How do I make sure the supplier delivers on time?
Keep on top of the project – regular updates, understanding what has been done, what is still to be done. Make sure you provide what the supplier needs when it needs it; suppliers are very good at having “dependencies” on their Customers – and charging extra if you fail these and delays occur. Also, have staged payments – don’t pay all up front; that way you can keep the supplier on track and only pay when it delivers. Also look at some financial incentive (liquidated damages) which would be payable if the supplier is late. Give them the right incentive to deliver on time!
What do I need to own?
Make sure that you own and continue to own anything you need to i.e. anything specific to your business. This way you ensure that if and when you change supplier down the line you can take what you need to a new supplier and you don’t end up being charged to take your own data away.
How do I protect my confidential information and key business data?
How do I ensure that I don’t get in trouble for loss of personal data? Agreements need to contain appropriate confidentiality provisions to protect your confidential information. These are common in business, but need to be drafted well and put in place at the right time. You will also need to ensure that where a supplier is processing any personal data, that data is looked after, secure and not misused. This involves putting obligations on your supplier to ensure that you don’t fall foul of the law. It is your responsibility to look after data where you are the “controller” and you need to ensure that the supplier is bound to look after any data to which it has access.
What happens if things go wrong?
You will want to have appropriate remedies if the solution doesn’t work. Potentially this could be a Service Level Regime to make sure the system runs as it should and is properly supported by the supplier. If things are more serious, you need to ensure that the supplier can’t just walk away without you being compensated accordingly. Suppliers will try to limit their liability for their failures, but you need to ensure that those limits are fair and don’t leave you without proper redress.
Am I ready for the change?
Many business change project implementations fail because organisations can’t, or more likely, won’t embrace change. Organisations will implement a new ERP system at significant cost and disruption – and then simply go back to the way they were doing things before. Part of the ERP journey is the organisational change required to make it work. If you are not prepared to make this change – think hard before looking at implementing new solutions. If you need help on this change – get it. It will be worth the investment..
Take guidance from advisers. You may feel confident in the way you address the project and working with a supplier, but it may be worth the investment to get the right support at the right time. You may also be concerned about lack of experience in dealing with matters (“I’ve never done this kind of thing before and they’ll run rings round me”). Again, accept help – there are people out there who do this for a living and can help across the board – whether to cover the legal work, supplier selection, project management, change management or other aspects of a deal. (We have CTO and IT Director allies at the ready should this be of relevance and would be happy to make an introduction).
Ensuring that your agreement with the supplier is clear, robust and fair and that each party knows what is expected from it in delivering is key to the foundation of a successful implementation to help grow your business.
Written by David Roberts
Principal at My Inhouse Lawyer
One of our values (Growth) is, in many ways, all about cultivating a growth mindset. We are passionate about learning, improving and evolving. We learn from each other, use the best know-how tools in the market and constantly look for ways to simplify. Lawskool is our way of sharing with you. It isn’t intended to be legal advice, rather to enlighten you to make smart business decisions day to day with the benefit of some of our insight. We hope you enjoy the experience. There are some really good ideas and tips coming from some of the best inhouse lawyers. Easy to read and practical. If there’s something you’d like us to write about or some feedback you wish to share, feel free to drop us a note. Equally, if it’s legal advice you’re after, then just give us a call on 0207 939 3959.
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