Today’s post is by Mark Davis; Sr. Vice President of Operations and CTO at SafeSourcing. 

One of the common pitfalls of negotiating contracts for IT categories, especially software, is having the right people involved and the right details included.  Many times corporate legal teams will not have the technical depth to understand the project needs or timeline and IT managers are often too conservative to pushback on language that will leave the company vulnerable.  Having both sides review contracts closely will allow for the best results for your company and ensure that it contains the right details.

In today’s blog we will be looking at some of those details to include in your IT software contracts to ensure you have the broadest protection.

Specifications – Statements of Work and specifications are some of the most important elements in your IT contracts.  They will highlight the project and what the solution you are purchasing will accomplish.  It is important at this stage to make sure that every specification is captured in the contract.  Ensure that you have architectural specifications, design and functional specifications, and most importantly performance specifications.  These will help ensure that the solution delivers as expected, with no surprises 

Fee Structure – Fee structures for IT related purchases can be complex and should have good supporting detail surrounding them.  This includes a payment schedule of deposits and deliverables where applicable and how the licensing will be structured.  Often user-based, sever-based, CPU based and volume-based licensing are the most frequently used and each comes with its own pros and cons. Make sure you get the best structure for your business as well as explore the possibility of an Enterprise or Unlimited option if it makes sense.

Code Escrow –When dealing with smaller companies it is a good idea to pursue the possibility of putting the source code into escrow.  By defining the parameters by which the code would be accessible to your business, you will help to ensure your investment is protected regardless of what happens to the supplier’s business. 

Third Party Software – The use of third party tools in IT solutions can make some IT solutions more complicated.  Make sure that the licensing, fees, relationships between vendor and 3rd party companies are well defined so that you can know who is responsible for which aspect.  Above all, make sure that the responsibility of supporting the third party tool is detailed in the contract so that you will know who you will be contacting in the event of an issue. 

For more information about how SafeSourcing can assist with sourcing your IT projects, please contact a SafeSourcing Customer Service Representative.  

We look forward to your comments.

Sourcing strategic plans sometimes have way too many guidelines that to often result in little to no specific actions. Without actions, plans are really nothing more than dreams.

Strategic sourcing in the retail vertical continues to be way behind the rest of industry. It’s time that strategic sourcing plans result in specific short term tactics that can drive immediate and measureable results. Do you have the tools in place to help you carry out these tactics?

A strategy is simply a plan of action designed to achieve a particular goal. In the case of strategic sourcing, the simple goal might be to buy the best product (quality) at the best price and labor optimization (total cost) from the best suppliers (standards).

In today’s world way too many manual processes remain in place in the retail vertical relative to the RFX or other procurement areas such as POM or CLM. There are too many pieces and parts on too many desk drawers or on to many non accessible desk tops. This does not mean that retail organizations do not have a sourcing strategy. For example, the goal of a company may be to improve net profits: the strategy chosen might simply be to reduce costs of goods and services. But the real issue is the The question HOW and with WHAT?

Most retail companies do not have tools in place that allow for the  automation of the RFX, Contract Management, Purchase Order Management or other procurement processes that drive best in class results from a strategic sourcing plan. So will this plan be successful. Probably not! In fact, more times than not companies will continue with or revert to using their time honored processes and negotiation techniques. These results in the potential loss of any savings you were able to indentify though leakage that is invisible.

Enter the specific tactic. Maybe rather than developing tactics for a plan that is destined to fail, you should call a Strategic Sourcing solutions provider that can provide you with the tools that support your strategy and can be implemented quickly in order to keep you in front of that other company on the opposite side of the street.

The planning starts today, so why not reach out to a SafeSourcing customer services representative to find out how easy we can make achieving your strategic goals. 2013 is just around the corner.

We look forward to and appreciate your comments.