Apr 01, 2015 while it is imperative to understand future technology requirements, an organization should never begin a software contract negotiation without knowing its current license deployments versus entitlements, or software license position slp. In a software contract renewal, we see many times that the entire negotiation is left up to the procurement team. Oracle software licensing contract negotiation software licensing is something we cannot get around when scaling our businesses. Nine golden rules for software contract negotiations the. It can be easy to overlook certain nuances and requirements when negotiating an oracle license contract. This chapter provides a road map for licensing professionals to identify the most common terms, contractual obligations, and other provisions that are likely to be encountered in crafting a license agreement. If you can avoid these five mistakes when you buy software as a service saas or pay for any other type of license, you are on the right track to. How to negotiate a software license agreement giva. Jan 29, 2017 your goal should be to reduce negotiation cycles by dealing with the people on the vendors team that have the power to accommodate your negotiation requests. Most software maintenance agreements are written such that the annual maintenance renews automatically unless the customer gives formal written notice to the contrary. License negotiation case studies software licensing experts. Aug 09, 2002 and dont let your employees sabotage the deal. Knowledge is king for software licensing negotiations. Negotiating and drafting software license agreements.
Top 10 software contract negotiation tips hartman executive. Each of our clients over the last 17 years has had a software license discount. Our team members are proficient global software licensing and contract experts. Getting the best deal on your companys enterprise software doesnt just mean getting the lowest price. Data security, privacy, service performance, intellectual property ownership, business operations and customer service are a few of the many issues that businesses may encounter when negotiating software license and saas contracts. Tips for negotiating erp license agreements erp software. A saas software agreement is a services contract and doesnt require a software license. You can join the thousands of professionals who have honed their skills through icn training. Successfully negotiating software license agreements lexology. Software licensing transactions are more complex and more important than ever. Dec 01, 2015 presented by reinhart attorneys benjamin g. Spector potential risks and remedies involved and how to address as part of a negotiation negotiation of certain provisions.
Cloud contracting software licensing vendor management. Too much time spent negotiating liability limitations. The negotiation team can then compare their facts to the vendors facts and identify where inconsistencies lie in. Software and systems licensing and contract negotiation expert witness. Here are five rules for negotiating software and it contracts. Stay away from the negotiating table a general principle in negotiations is. Software agreement so that you are protected from price increases if you need additional work done. Licensees should clearly define their desired uses and rights to the software before the negotiation of the license agreement and make sure that all provisions of the license agreement are consistent with such desired uses and rights. The constantly evolving legal, technical and regulatory landscape drives the need to stay current in a wide variety of key areas. Limitationofliability provisions usually rank at or near the top of the iaccms annual surveys of the mostfrequentlynegotiated contract terms ironically, the same surveys indicate that contract professionals fervently wish they could spend their time negotiating collaborative provisions to try to keep trouble. I came across a white paper by budd larner of the the technology executives club recently listing the top 10 issues in software license agreements and negotiations.
License negotiation case studies at emerset, we have helped companies achieve substantial savings in virtually every industry, and here are some of their stories. Contract negotiation we best position your oracle contract to reflect your needs of today and the future. Emerset crosschecked it to ensure that all of the agreed points were included. Sep 12, 2011 most it contract drafters know the difference between a software license agreement and a technology services contract. Ten tips for negotiating software license agreements 1. By negotiating an erp vendor software license agreement that accurately represents the way you will use and access the software and anticipates future growth and future needs, you decrease the likelihood of breaching th e sap software license agreement, increase your ability to comply with the software license agreement and reduce your costs over the life cycle of the license agreement. In a software negotiating situation, its essential the negotiation team be armed with data from a few key, yet reliable sources, such as a strong discovery tool and the relevant license information. Cios and it sourcing and procurement leaders can rely on this initiative to help them negotiate optimal software terms, particularly with entrenched suppliers or with new contracting models. We ensure that our clients are provided with the tools and knowledge to achieve favorable contract concessions from their erp vendor. Microsoft software asset management software license. The business ends up thinking they got a good deal, when they may have gotten another 20% off.
Summary this overview provides a highlevel description of the negotiating software contracts key initiative. The problem is, at a certain point, software licenses are not always cost effective. Software and systems licensing and contract negotiation. A software license negotiation is a complex process where a licensor and licensee seek to establish a relationship allowing the use of certain intellectual property, namely licensors software programs. While many procurement professionals are great at negotiating a bottomline discount, what is important to them in a renewal negotiation is totally different than what is important to legal, or even it departments. But software as a service saas seems to throw a wrench into the gears. After the painstaking process of selecting the appropriate vendor, there is often an overwhelming desire to get the contract signed as quickly as possible. Strategies for negotiating licenses by david wanetick1 you will never get the license agreement your technology deserves.
Jun 14, 2018 important questions to ask when negotiating software license agreements. Searching for cloud or software vendors can prove to be a lot more difficult than you initially estimated. Dont use license agreements for software as a service tech. That work begins on day one of your work with the vendor, and so does the maintenance and support planalong with maintenance fees. Negotiating software contracts successfully negotiating a warranty section. If youre an independent product developer, you may feel like youre at a disadvantage when it comes to negotiating with a powerful company. As an experienced oracle platinum partner, we provide guidance on licensing requirements to minimize future financial surprises and compliance risks. Understanding software license and services agreements. If youre an independent product developer, you may feel like youre at a disadvantage when it. The software vendors know this and optimize their contract processes based on the strengths and weaknesses of their customers procurement and negotiating processes. How to excel at contract negotiation strategies for. This overview provides a highlevel description of the negotiating software contracts key initiative.
The warranty section deals with the performance of the software and what the licensor promises the. Review of various negotiation theories may better prepare you to tackle the contract, secure. With this in mind, it is important for inventors, licensing professionals and intellectual property lawyers to constantly hone their negotiating. Whenever possible, attempt to negotiate some cap along with a formal process in the contract to deal with scope creep. Mar 12, 2020 software providers want their tool to work for you, but they also have skilled teams trained to maximize deals in their favor. How to negotiate a better deal on enterprise software. Emerset consulting group software licensing experts. Software license agreements vary as much as the software they relate to, and software and software license models are constantly changing and evolving. Negotiation of certain provisions to help to reduce licensees liability the implications of cloudbased software and the risks associated with a data breach category.
With this in mind, it is important for inventors, licensing professionals and intellectual property lawyers to constantly hone their negotiating skills. Consistently successful contract negotiation begins with the knowledge that it is an ongoing process and not a onehit wonder see figure 1. In a license, the customer gets rights to copy and use software, while in a services contract, the customer gets a service, like tech support or it consulting. License procurement solution aspera software asset. Tackling a software contract, be it software as a service or traditional license, involves recourse to negotiation theory to examine how to approach achieving a workable result for the purchaser and contractor. With this in mind, weve provided some research done on 20 different publishers, including a wide range of large and small software companies. Negotiating software contracts is as much an art as it is a science. Tips for negotiating with enterprise software vendors like. But software as a service saas seems to throw a wrench into the. Most oracle customers think of their contracts as simple purchasing documents that allow them to use the software.
With every consolidation, new purchase, migration, or contract change, there is an opportunity for oracle to reverse what customers previously negotiated. A software license negotiation is a complex process where a licensor and licensee seek to. There are a plenty of vendors who can provide you with business software. Get software license negotiation from leading consultants of emea software in the uk. Software litigation attorneys erp contract and litigation. In negotiating the software licenses, a favorable agreement was reached. Remember that the real cost savings or discount is the actual net price paid for a software license or solution over the life of the contract. Contract complexity makes cost and usage evaluation a challenge for it decision makers. By seeing what standards and variations exist across multiple publishers, we could get a feel of what is fair game in a software license agreement negotiation. A clear view of the license estate is a must, which can be achieved by adopting a software license optimization approacha methodology that helps analyze software purchased, minimize license consumption, and ensure the most efficient allocation of software across the organization.
This makes negotiating software license agreements even harder. The license grant is one of the most important provisions in any enterprise software license. License negotiation case studies licensing experts for. Of course, you need to have enough time to prepare and get all the facts right. Negotiating software contracts key initiative overview. Metrixdata 360 has helped our clients negotiate over 1. Post agreement, emerset continued to support the company to ensure its employees made productive use of their software assurance benefits. The ability to structure, draft and negotiate complex software license agreements is critical to a successful transaction. Successfully negotiating software license agreements. We have to use the best software to be more efficient, time effective and innovative. Brooks hilliard has negotiated hundreds of computer systems and services contracts as an information technology consultant and, prior to founding business automation, as an industry executive.
Negotiating software contracts successfully negotiating. Get transparency into your software environment, including a complete overview of all software products onpremises and in the cloud, contract data, and terms and conditions. This article offers suggestions for a company to follow when negotiating a software license agreement. Aug 19, 20 to ensure consistency, ive created a software contract checklist which id be happy to share. Mar 06, 2015 how to negotiate a licensing agreement like a pro. Important questions to ask when negotiating software license. A warranty is one of the most important contract provisions in a software contract. By focusing on the terms and conditions of the contract based on current and future needs, the organization will score the best deal now and for the future. Since most people engaged in deal making are involved in multiple deals at the same time, important aspects can be forgotten or. Ultimately, the software license agreement may be a product of significant negotiation between the licensor and the licensee. Oracle contract negotiations software contract management. Imagine your software relationship starts with implementation or some other type of customization. Negotiating a licensing agreement takes timemore time than you will want it to.
Often, vendors talk to people at buying companies before the negotiations start, then gear the negotiation to the budget, says ditka reiner, founder and president at reiner associates, a softwarecontract negotiation firm in san francisco. May, 2016 negotiating software contracts successfully negotiating a warranty section. You can obtain some great discounts at the end of the quarter and particularly at the end of the software vendors fiscal year. Software license agreements checklist software contract. A checklist for negotiating license agreements donna bobrowicz, technology transfer specialist, loyola university chicago, office of research services, u. What are the best practices for software contract negotiations. A saas license agreement could be called a hybrid between a software license agreement and a software as a service, or saas agreement. Oracle software licensing negotiation software contract. The warranty section deals with the performance of the software and what the licensor promises the software will or will not do.
Negotiating software contracts successfully negotiating a. With inhouse legal experience at some of the largest erp vendors in the world, we bring a wealth of knowledge and experience to the erp vendor contract negotiation process. Tecs experts break down the steps to a successful software selection negotiation, from the opening conversation to the closing handshake. Extensive software discounts are negotiated with major software publishers that are then passed on to the state, through the slp contracts established with authorized participating resellers. Ten tips for negotiating software license agreements. Jan 05, 2011 i can only speak for saas or subscription software. An example of additional work might be a result of changes to your operating system. License agreements can be a great way for a startup company to generate revenue from sources other than the foundersfunders. Gartner recommends these preparation tips for an optimal software contract negotiation to get the best software deal possible.
Dont use license agreements for software as a service. Also its important to note that the negotiating of software licenses is all about reading the text of the license agreement, and negotiating with the. Dont pay for maintenance or support before you need it. Often, vendors talk to people at buying companies before the negotiations start, then gear the negotiation to the budget, says ditka reiner, founder and president at reiner associates, a software contract negotiation firm in san francisco. The software licensing program slp was established in january 1994 and is administered by the department of general services, procurement division. Proper negotiation contract negotiation is an ongoing process. This article is for tech customers, as opposed to vendors. Tecs experts break down the steps to a successful software selection negotiation. Despite this fluidity, a software license agreement checklist can be a useful tool for both licensors and licensees and their internal stakeholders. This process requires the parties to demonstrate organization, planning, communication. You will never get the license agreement your technology deserves. The confusion lies in the usage of the word software. Jul 04, 2018 how to excel at contract negotiation strategies for enterprise software introduction. Worry free software contract contract negotiations metrixdata 360.
Startups can license their technology separately, or as part of a collaboration with another company. How to negotiate a better software audit clause the shi blog. Every deal is unique, but in my experience, the negotiation process is largely the same. This is more likely to be the case where a licensee has more leverage or where the licensor has a strong economic interest in closing the licensing transaction. If the vendor is customizing software, the contract. Before getting to the contract negotiation table, the most important piece of advice to consider is how to pick the software that is right for your organization. Licensees should clearly define their desired uses and rights to the software before the negotiation of the license agreement and make sure that all. International computer negotiations icn has been training technology procurement professionals since 1975. Oct 21, 2012 negotiating the best software licensing agreement. A software asset management tool puts you back in the drivers seat when it comes to purchasing new software and negotiating contracts.