Josh Greenbaum has a good story on why it's important to read, question, and challenge the terms and conditions in ERP license agreements, or any vendor contract for that matter.
The case involves an IBM customer who, eight or nine years ago, signed a contract for PeopleSoft software running on an IBM mainframe. The problem? A clause in the contract stated that the mainframe computer had been discounted as part of the PeopleSoft deal and that if the customer ever moved PeopleSoft off the mainframe, IBM was entitled to raise maintenance fees on the mainframe.
Recently the customer decided to migrate the PeopleSoft application to Microsoft SQL Server. IBM responded by pointing out the migration clause in the long-forgotten contract.Josh explains the impact:
This tripling of the mainframe price tag effectively wiped out any possible savings for the database migration, not to mention good will and trust. You can imagine how happy this customer is with its long-term “partner.” And how eager this customer is to do any more business with IBM.
The takeaway is, read those contracts before signing them and don't just count on your corporate attorney to do the contract review. Many lawyers read technology contracts from a purely legal perspective and do not have the subject-matter knowledge to see the implications of what the vendor is asking for.
Furthermore, never accept that line that the vendor's salesperson is unable to get changes to terms and conditions because they are part of the vendor's "standard contract." In reviewing vendor contracts on behalf of clients, I've learned: everything is negotiable.
When you are committing your organization to a system and a relationship that may last ten years or more, you need to know what you are signing.Related Posts
High software maintenance fees and what to do about them