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Empowering the IT Team in Business Contracts (Part 2)

Posted 29th June 2011 by Jagvinder Kang, Director

In the last blog we recognised the need for IT executives to become more involved in contractual discussions and contract formation, as after all, it is the internal IT executives who are more likely to have their finger on the pulse with regard to the requirements of a technology procurement.

Sometimes the procurement team feel that it might be appropriate to engage an IT consultant to assist with the procurement, in view of either the time commitment constraints which the internal IT team are under, or because they feel that more value can sometimes be gained by engaging external consultants in this respect.

Now do not get me wrong, there is nothing wrong with engaging an external IT consultant, and sometimes there can be true value to going down that path, but only if it genuinely is to fill a skills or resource gap within the internal team (for example, where a large scale procurement is to be undertaken where the internal team do not have the requisite knowledge with regard to the platform or infrastructure which is to be acquired).

The reason for my concerns with regard to external IT consultants, is that in my experience, I have found that certain consultants can sometimes over-engineer a procurement exercise (probably more likely to happen if they are charging on a daily basis!), or they are not close enough to the internal business to ensure a full alignment with the business drivers for the procurement.

External consultants sometimes also see themselves as quasi-lawyers, and that's when things start to get really interesting, as then the contract seems to have a sudden requirement to increase in volume by an unnecessary number of inches!

The bottom line is that internal IT executives will have lived and breathed with the business. They will know what works and what currently does not work, and what the solution which is required, needs to address. These are the arrangements which need to be considered and reflected in the contractual documentation.

The IT executives should therefore, be working closely with the lawyers (or the external consultant and the lawyers) to help formulate such details as:

  • What is specifically required;
  • Internal pressure on the team, and risk corners being unnecessarily cut, which is likely to have an adverse impact on the respective project implementation);
  • What form of project governance is required to keep the project to the timelines and to deal with any issues along the way, and who needs to be involved in the respective steering or review meetings to monitor progress and help resolve issues;
  • Is there a transition required from the legacy to the new systems, and how and when will that occur;
  • Which internal business continuity and disaster recovery measures does the business have, how will they need to be updated in view of the proposed procurement, what type of interaction will the supplier need to have with these, and/or which measures will the supplier need to provide in the event of adverse issues arising during the project timeline;
  • What level of resource commitment, information and assistance will the supplier require from the customer, and at what stages in the timeline;
  • What form of post implementation support will be required;
  • Where service levels are applicable to a project (for example: where there is a hosted solution; or where there are certain performance requirements to be delivered by the solution; or where helpdesk and on-site support is required), which service levels are appropriate (taking into account any historic service levels for example), which remedies are required for service level failure, and at what levels would this result in more substantive remedies being required, such as the ability to sue for damages and/or terminate the contract; Where an outsourced service is being provided, what type of exit assistance would be required upon the termi¬nation of the arrangement, in order to transition the service to another provider or internally to the customer.

These are the types of areas where an internal IT executive can provide real value into the contractual discussions and documentation, rather than leaving the lawyers or the external consultants either formulating these in a vacuum, or pushing for the maximum that they can extract from the supplier (at the risk of straining the commercial relationship from the outset).

It is therefore important, for IT executives to recognise the strengths which they have internally with regard to the conduct of such projects, and supplement, rather than replace, such internal resource as they believe is appropriate for the success of the procurement.