Rory Canavan

SAM & Contracts:  What are you bringing to the table?

Blog Post created by Rory Canavan on Oct 24, 2017

I was thinking back to a time when I was studying at University and one of the papers I was writing concerned the role of strategy in company growth.  At the time, it just so happened I picked HP - which was very fortuitous as one week into the assignment Carli Fiorina (the then CEO of HP) had her contract terminated for the "differences in her strategic viewpoint" from the rest of the board.  It was rumoured Carli's termination package saw her receive a $24M pay-out in cash, and a further $24M in HP stock options - and this was when $48M was a lot of money!

 

There was a lot of vocal displeasure concerning the size of the settlement; not least (as happens when two major companies come together) many staff lost their jobs.

 

But here's the thing....

 

Carli didn't negotiate that figure after she was dismissed - she negotiated it before she was employed. 

 

The point I am coming to is this:  What terms and conditions are you bringing to the table in respect of Software Asset Management?  After all, a contract is a legally binding agreement between two or more parties - it is not a one-way highway for software vendors to gut your company's bottom line.

 

A slightly wider (and higher) point worth noting, is that just because certain terms and conditions are enshrined in a contract, if a judge deems those terms and conditions unreasonable then they no longer become enforceable - so if a vendor places onerous demands on you through a contract, don't be afraid to return to that vendor and ask "how" you are supposed to adhere to those terms....

 

Company size is important too; if your spending power is of such a size with a software vendor, then don't be afraid to leverage the scale of the deal in your favour.  I knew of one such company (albeit global) who bought so much software through Oracle, that their audit terms stipulated that a licence shall only be deemed consumed if the software is used (not installed, but used).  Kudos to the procurement staff member who drove that bit of fine print through.

 

Consider too, the angst caused by your last vendor audit - did you have terms and conditions that you brought to the table that stipulated the "do's and don't" of software vendor behaviour for that audit?  One aspect that always surprises me, is that vendor audits are often prescribed as "lines in the sand“ this is the final and absolute position we agree upon, reflecting our software in your IT estate - but it's amazing how many audits pull out installations and titles that were from before the date of the last audit, and seek reparation for same.

 

Again, if I were a CIO, I would be stipulating that third parties who represent software vendors can only conduct the current audit, and are not able to conduct a second audit (for another vendor) for another 12 months from the end of the current audit - have you been the victim of revolving-door audits from the same third party?

 

Increasingly, with the move to the cloud, we are kicking over operational control of our software management assuming that the ISP/SPLA providers are abiding by the terms and conditions of the software they are hosting on our behalf.  If I were a CIO, I would want to make sure that a line or two such as below is included in any hosting agreement I would be asked to sign:

 

"Any change-activity that could alter this company's licence position must be expressly ratified by an authorised member of this company's IT department BEFORE the change is made.  Any subsequent licence and support & maintenance penalties that result from unauthorised changes will be borne by the ISP".

 

I'm sure I am just scratching the surface; I would be keen to hear of what other proactive steps people are taking to manage their IT estate through contract T&Cs.

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