Pre-Nups in a Tinder age! IT shopping needs new knots

|November 29, 2016 0
Signing IT contracts can be an exercise immersed in guess-making, confusion and looking for room to choke a throat if the need ever arises. So what do you do when there are too many throats and no sight of the jugular?

Pratima H

MUMBAI, INDIA: Marriage was simpler in earlier decades. There was no fine-print to worry about, no what-ifs to be armed for, no slicing of house-hold chores, no asterisks to comb, no shrinks to be entertained and no ex-s in the mix.

The invisible ingredient of understanding and let’s-make-it-work streak was visible in almost every relationship of the yore – even that of a lender and a borrower, a landlord and a tenant, a horse and its bale of hay.

So what do you do when SaaS enters, virtualization arrives, SLAs vibrate, renewals knock and the sheer complexity of IT makes spelling everything out a grossly unpleasant, but equally unavoidable ritual? CIOs and IT purchasing teams have been grappling with a lot of new baffling issues and wish they could have IT heterogeneity, cloud, renewals, audits, virtual estate etc twigged well when it comes to signing on the dotted line.

Stewart Buchanan, Research VP in Gartner’s Technology Procurement Leaders team, where he spends most of his time focusing on the economics of the enterprise acquisition of digital technologies, including software licenses; might have some answers as he debunks the very fixation of spelling everything out and dismisses the notion of a playbook that can help at all turns.

Have IT contracts kept in step with the changing flavours of the industry? Do Cloud, SaaS etc bring in more flexibility or complexity in contract negotiations?

The reality is different. It is important for an IT team to get clarity because a SaaS situation would not necessarily reduce complexity. Reading SaaS contracts may make you realise that they are often pre-built and inadequate on many parts; thus leaving you to taking a lot of courage and trusting the brand.

The players with a bone in the cloud have contracts that are not very flexible which can be quite a disappointment for many people who want to negotiate. For many people, getting used to a SaaS world can be very difficult. The whole relationship is different whether it is discounts or the way the contract is structured. The contracts are built for a set price, risk and efficiency parameter so they are naturally quite standardized. If clients won’t find this suitable, they would be wasting time.

What about virtualisation and the blur it creates? Can contracts handle it all well?

Most people still assume that buying a license is akin to buying a CD. Procurement professionals know that a software license is a license with specific rights that may not be easy to understand in a virtualised environment. So there is a lot of interpretation and policy that comes into play.

It doesn’t matter what the vendor sets out in requirements, it’s what will hold in the court of law. That’s the real maturity one needs to achieve. A vendor may urge you to buy more licenses but one has to use monitoring tools, asset management etc and a robust IT policy here. Most customers would have to adjust to this new Tinder generation world. Suppliers would have to communicate the value proposition in new ways and to the right clients.

Stewart B, Gartner

Stewart B, Gartner

Is taking care of licenses from an audit sense still like walking on eggshells?

A lot of clients understand that software management has to be done even if it’s a SaaS or virtualized environment. It has to be monitored and asset management still holds important. Indian companies are becoming increasingly mature in this area and am pleasantly surprised at the conversations they have and the questions they ask.

How do renewals play out?

This is a situation similar to re-considering a deal with a landlord. Would you rent again – what if the landlord increases the rent; What if there is friction? Do you have choice if you feel like going away? Agility is not about something that a contract can provide, it’s also about behavior. Be prepared. You cannot instantly switch providers. Be in the know of the difference between friends and acquaintances. As long as a customer has adequate data to make a decision either ways, s/he can’t be held hostage.

Anything you advise in terms of picking what to choose in a pre-nup scenario here – the kids or the property; the performance or the penalty; uptime or security?

I feel the other way. If you feel the room for signing a pre-nup then you are probably not with the right partner to start with. That’s enough of a sign. If you fail in a negotiation, may be you have chosen the wrong partner. It’s better to pick the right partner instead of a pre-nup. A contract is not the answer to everything. Software vendors do not really let you negotiate everything no matter how big a company you are.

What I advise is this: A customer should be absolutely aware of what the key assets are and should keep everyone in the organisation safe when it comes to information. Crucial IP can’t be lost in the cloud because of a bad contract. It is nice to see some parts of relevant laws being re-assessed and filled when it comes to the missing pieces for descriptions on what to measure and what not. It is hugely helpful and powerful even if the contract takes precedence.

What’s your suggestion kit for CIOs?

The old ways of doing business have to be replaced with more agile and relevant ones. You can’t take nine months to negotiate and sign a contract, not if you want to be an innovator. The contract is not THE thing anymore. IT organisations can move on from saying ‘no’ to saying ‘yes’ with more planning and confidence. There are ample tools and capabilities in the market to enable that.

I am happy to see so many Indian companies aware of audits etc. People have started to wake up to risks and correct usage issues etc. Managing the cost, scope and value of any asset gives a lot of unprecedented control and requires maturity. I am surprised to see Indian companies having that maturity.

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