Webinar invite: How to achieve Software Contract Compliance

Thursday, 19th July 2012, 10am and 5pm

  • Has being under-licensed ever taken you by surprise?
  • Would it be useful, or even a requirement, to know your complete software license position?
  • Is UK, European and International regulatory and legislative compliance important to you? e.g. SOX, Basel II, Mifid

If you answered yes to any of the points above, you could benefit from joining Turnstone and Seal Software, for this free-to-attend, informative webinar, to learn how to:

  • Easily and rapidly gain full visibility of your software license arrangements
  • Achieve cost savings on software renewals and out of date support and maintenance contracts
  • Identify and catalogue all of your IT contracts and commitments

The webinar will cover not only the “why”, but also the “how” of efficient, effective and economical software contract compliance.

REGISTER NOW!

Businesses rein in spending on hardware and software

Businesses are reining in their spending on hardware and software amid continued uncertainty in the global economy.

Analyst group Gartner has revised down its forecast for spending on hardware and software, despite overall growth in IT investment over the year.

Richard Gordon, research vice-president of the analyst group, said businesses are taking a cautious approach to upgrading their infrastructure amid uncertainty in the Eurozone, the US and China.

“There is continued caution about spending in the economic environment. Until we get some strong leadership in Europe on how the crisis is going to be resolved, both businesses and consumers are going to be cautious,” he said.

Overall IT spending is expected to grow by 3% from $3.5trn to $3.6trn worldwide between 2011 and 2012.

But Gartner has revised down its forecasts for growth in spending on PCs from 4% to 2%, and spending on software from 5% to 4.3% in 2012.

Spending on PCs, mobile devices, ultramobiles and tablet computers will be lower than expected, said Gordon.

The situation is unlikely to change until there is more certainty about the economic future of the Eurozone.

“Businesses need clarity. The solution to the Eurozone crisis is not clear yet. We get fudge after fudge,” he said.

On the positive side, business spending on cloud computing is expected to grow over the next five years from $91bn worldwide in 2011 to $207bn by 2016.

However, cloud continues to account for only a small proportion of overall IT spending, and is expected to rise from 2% to just 5% of overall IT investments by 2016.

Companies are turning to big data and business analytics to gain a competitive advantage from the data they collect on their customers.

Read the full article here.

The case of IBM and AstraZeneca: Tips and bottom line

The case on the dispute between IBM and AstraZeneca does not break any new legal ground, but it does illustrate that the devil is in the detail of exit provisions when complex outsourcing arrangements terminate.

The dispute over the extent and duration of the outgoing supplier’s obligations turned in part on an ambiguous definition of “shared services”, and the extent to which the supplier’s obligations were dependent on the performance of obligations by the customer.

It is easy to say how essential it is for comprehensive exit provisions to be agreed before the point of signature in an outsourcing deal – this kind of dispute is the proof.

The exit plan should be as detailed and unambiguous as possible and should set out:

• the scope and extent of both parties’ obligations on termination;

• a clear end-date on which the supplier’s services and assistance will cease;

• the fee (if any) payable for the supplier’s assistance; and

• which assets and services are used by the customer and provided exclusively by the supplier, and which are shared with other customers of the supplier.

More generally, whilst this case demonstrates that courts appreciate that drafting inconsistencies will inevitably be made in complex, lengthy services and outsourcing agreements, the more attention to detail that goes into the drafting, the more likely it will be that the risk of costly litigation will be reduced.
Extracted from “Technology and outsourcing: exit and handover issues to watch out for” by Dominic Dryden, Olswang

 

“Scope creep” in IT projects

It is still shocking how many IT projects are rushed along to meet an ‘artificial deadline,’ at the expense of having clarity of what is actually being sought to be delivered, as well as the respective obligations of the customer and IT service provider.

Scope creep: The unclear scope is just opening parties up to potential project failure and litigation down the line. As what is likely to be produced, is probably not going to meet the aspirations and expectations which the customer has.

At the same time, trying to subsequently change the project scope to meet those requirements, is something which the service provider has probably not factored into its time and cost model for the project.

The ‘classic fudge’ to this problem, is to adopt a complacent approach, by a customer stating that it requires a new solution, which achieves all of the functionality and performance of what the customer already had ‘and then some’… (the ‘then some’ usually has a sprinkling of ‘kitchen sink’ items !).

So what is the problem with adopting such a short-cut approach? Well, unless it is a very simple IT implementation from a standard platform, for an IT service provider to work out what the existing system is providing from a functionality and performance perspective, is going to require considerable due diligence – which means time and cost.

There will also be the inevitable caveats to what is covered and not covered by such due diligence.

So the customer will inevitably risk ending up with a solution which does not entirely meet its requirements, because of the limitations and caveats applied to the due diligence exercise.

It is therefore, far better, for the IT and commercial teams of the parties to invest some time to ensure that there is contractually documented clarity on the scope of the project, together with an agreed process to ensure that any granularity of scope can be agreed.

Extracted from “Success by planning for IT failure” by Jagvinder Kang, Technology Law Alliance

Market trends from Turnstone’s perspective

“Over the last few months we have seen increasing client activity within cloud, spanning software, infrastructure and platform-as-a-service (Saas, IaaS and PaaS).

Due diligence becomes even more important when engaging with suppliers in this territory, due to three key factors:

i.)    Pricing models – is it truly usage based?
ii.)   Exit and transition agreements – making sure you are covered for ‘divorce’
iii.)  Addressing commercial risk exposures such as data escrow, data protection liabilities, hosting arrangements

Overall, we would sound a cautionary note that whilst cloud can enable greater business access to new technology, the apparent ease of buying can also accelerate you into a commercial deal which favours the supplier. For instance, the free or subsidised pilot is one common route into this problem.

Aside from cloud we are seeing much activity within WAN and telephony, where the market is providing an increasingly converged offering.

This demands a well-structured approach to market evaluation, to include not only the functional requirements but also your key commercial requirements.

What would you do if your IT vendors did not exist?

It is worth taking some time to ask yourself what you would do if your key suppliers no longer existed.

- How much do you depend on our suppliers and how much should you?
- How does supplier behaviour affect your processes and staff morale?
- What do you have in terms of a ‘plan B’?

Many disaster recovery plans focus on the large scale, and more dramatic scenarios.
Fewer focus on impacts from your third party suppliers. These range from the severe (bankruptcy), being taken over by a competitor, phasing out of the goods/ services, onerous price rises or security violations.

One mitigation is to perform regular supplier health checks, which focus
on the commercial aspects.

Another is to regularly test the market to choose and negotiate a deal with a back up supplier. This can include a transition plan, defining who does what, when and for how much. In addition to providing the security of a pragmatic back up plan, the exercise also stimulates competition and will tend to keep your prime supplier keen as well.
We will examine this area in respect of cloud software providers in the next article, including what we are seeing commercially in the marketplace.

How to get the best deal from your software suppliers?

Software is one area where the supplier’s costs can have little relevance to the price paid by the end customer.

Work out what you can leverage to drive the price down. If your suppliers/customers are implementing the same software, you could drive the cost of licenses down to nothing
as the vendor will make revenue elsewhere.

If you can act as a reference site for the vendor, they will want to ensure your experience is positive, and give you commercial advantage in negotiation.

It’s advisable to tie payments to milestones to ensure what you pay for is actually working properly – suppliers will often resist this.

For the full article, click the link below:

http://www.supplymanagement.com/resources/q-and-a/2011/sorting-out-software-licenses/

By Andrew Curtois, IT Procurement Consultant, Turnstone Services

What’s next for IT departments?

The evolution of technologies remains of central importance to IT functions and the businesses they support. In terms of how IT departments work, there has been a universal move towards being a business focused support function, away from the ‘ivory tower’ days from the past.

But what is the next stage of evolution?
• Is it more outsourcing?
• The use of Cloud based services?
• Better project management, with Prince2?
• Or smarter infrastructure management?

At Turnstone, we believe all of these factors count, but there is one important process area which has been overlooked, and is only now gaining the attention it deserves. Looking within every IT department, there is a certain “commercial skills footprint”. This is comprised of the individual experience of the staff, coupled with the ‘buying processes’ that they run. Typically, these are a mix of the formal and informal, and can be heavily influenced by custom and practice.

“Most organizations fail to extract the most value from their vendor relationships because they have not developed a disciplined approach to managing their sourcing providers.
Without it, outsourcing clients can lose control of vendor relationships and are likely to incur greater costs on vendor deals.” Gartner

“An IT procurement process, formal or informal, exists in every organization that acquires information technology. As users of information systems increasingly find themselves in roles as customers of multiple technology vendors, this IT procurement process assumes greater management significance”, Robert Heckman, IT Today

Turnstone research shows that:
- less than 5% of IT staff receive any formal procurement training
- less than 1% of IT staff are CIPS qualified