Daily Archives: August 3, 2009

Does Your Software Come With A Bill of Rights?

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Ray Wang of Forrester recently released Version 2 of their Enterprise Software License Bill of Rights and Vinnie Mirchandani did an excellent revision over on Deal Architect that not only outlines what your rights should be but identifies some key issues you need to be aware of if your vendor does not provide you with a bill of rights as part of their textbook thick contract.

In particular, watch out for:

  • 40%+ SG&A
    that money should be going to R&D to give you a better product for the 22% to 30%+ maintenance you’ll be paying
  • no support/defect stats
    your provider should be measuring them, actively working on improving them, and be willing to provide them on request
  • certified service partners
    if they don’t have any, or won’t certify any, that’s a problem
  • an inability to flex-up / flex-down at each quarter
    you don’t want to be paying for shelf-ware
  • confusing SLAs
    you want clear, concise, and to the point

And be sure to check out Vinnie’s Version. If you going to invest seven, eight, and even nine figures (over the long term), you better make sure up front that you can get what you pay for.

Blogging on International Contracting?

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Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

After I made a brief comment on international contracting, the doctor suggested that “maybe I could write an expert piece about international contract construction?“.Well, that piece would be way too long for a blog format. I take about an hour on this topic in face-to-face seminars and that’s after a session on cultural differences.

What I can do in this format is give my philosophy and a tactic or two.

Why do people write purchasing contracts? (And not everyone does.) I see two reasons. First is to get a written document that describes what each party is going to do. Second is to enable bringing in a powerful third party (a court) to get a company to do what they might not do otherwise, such as pay liquidated damages.

When you cross borders, cultures and language barriers, the first reason becomes more important than it is domestically. The second reason becomes less practical. Adjudication and enforcement can be awfully difficult and expensive.

That means first of all, it’s much more important to get a good supplier than to get a good contract. Second, it means that the contract should be written to help with communication between the parties, not hinder it. It should be clear and easy to read (no size eight gray type please.)

Here’s the tactic for the day.

Run a grammar check on your contract using Microsoft Word with “check readability statistics” turned on. Look for a “reading ease” score of 40 or higher and a grade level requirement of 11th grade or less. Remember, the document probably won’t be in the supplier’s language. Once you achieve that, then print the document in an attractive format. Pay attention to typography and white space. Make it easy to read.

If your lawyer struggles with this, get him or her a copy of the SEC’s “A Plain English Handbook“. (Download link.) It has lots of guidelines and tips. Another good source is “Plain English for Lawyers,” which you can find on Amazon.

As a final note, I just happen to be doing my one and only public Global Supply Management seminar for 2009 in the Chicago area on August 11-12. Check this link for details.

Dick Locke, Global Procurement Group.