Elgin Ward ICN Senior Trainer. Disclaimer The recommendations discussed in this Class are not intended to be and do not constitute legal advice. Before.

Elgin WardICN Senior Trainer

Disclaimer

The recommendations discussed in this Class are not intended to be and do not constitute legal advice. Before making any changes to your documents, methodologies, or practices, CAUCUS and ICN strongly recommend that you consult with your attorneys and other professionals.

Level Setting

The Big Red Button for Software Maintenance (MX)

What is decided up front?• There will be MX

• Type of MX

• Payment plan for MX

• Budget commitment

• Who pays for MX

• No more decisions – MX is preapproved

Level Setting

What difference does it make anyway?• Annual spend

• Direction

• How MX sales are compensated

How profitable is MX for Vendors?• Public declarations

Story #1• A valuable legacy

First Deadly Sin – Auto Renewal

Maintenance (MX) is a contract How can contracts renew?• Simply, renew automatically (evergreen)

• Auto renew unless written cancellation notice given at least 60 days prior to expiration

• Modified renewal, like month-to-month

OR

• By agreement of the parties

First Deadly Sin – Auto Renewal

Why is auto renewal a Deadly Sin?• Customer internal critical review

• Negotiation leverage

Why is negotiation leverage important?• Changes to MX agreements

What options give Customer greatest negotiation leverage?• MX contract is allowed to lapse

Potential adverse effects?

First Deadly Sin – Auto Renewal

What options give Customer greatest negotiation leverage? (cont’d)• Auto renew unless written cancellation notice

given at least 60 days prior to expiration SUGGESTION: Unless Vendor gives Customer

advance written notice of option window at least 30 days before window starts, pro rata extension of window

• Auto renew month-to-month on same terms and conditions until Customer gives 30-day advance notice of termination

Second Deadly Sin –Failing to prepare for Renewal

Renewal can and should be a negotiation

Successful negotiations require preparation• Story #1: Lady said, “I do MX renewals”

Why is failure to prepare a Deadly Sin? What resources are needed to prepare?

Second Deadly Sin –Failing to prepare for Renewal

What does Customer need to prepare for MX renewal negotiations?• Knowledgeable staff

• Time

What role, if any, is played by Customer executive support?

Third Deadly Sin –Ignoring existing Contracts

Rights and obligations for MX must be specified in Contract documents

What Contract documents contain MX terms?• Software License Agreement

• MX Exhibit to Software License Agreement

• Separate MX agreement

• Amendments

• Professional Services Agreement

Third Deadly Sin –Ignoring existing Contracts

Vendor practices vs Contracts• What is the Vendor’s billing practice for MX?

Standard billing for all Repeat last year plus auto increase

Story #1• Invoice for 10% increase

Story #2• Invoice for $1,000,000 standard MX

Fourth Deadly Sin –Understaffing

Why is MX renewal oft assigned to 1 or few employees?

What could be done to encourage assignment of personnel to MX?

How many contracts can 1 person read and effectively analyze per day?

Fourth Deadly Sin –Understaffing

Importance of a business case for Staffing Story #1• In Trucking, you snooze, you lose

Elements of a business case• Identify opportunities

Direct savings Operational improvements

• Document actual savings

• Document operational improvements

Fifth Deadly Sin –Having no improvement goals

“If you don’t know where you are going, you’ll end up someplace else.”

–Yogi Berra

Does the Vendor have a MX goal and plan for the Customer?If the Customer doesn’t have a MX goal and plan, whose goal and plan will the Customer follow?

Fifth Deadly Sin –Having no improvement goals

Why is no improvement goals a Deadly Sin? In what areas might a Customer have MX

goals?• Money

• MX Service Levels

• Customer operational performance

• Customer Data collection

What would a Customer MX plan look like?

Sixth Deadly Sin –Keeping no or few MX Records

What MX records could the Customer keep?

Possible benefits of keeping records? Story #1• Anecdotes vs facts

If the Customer keeps no performance records, whose records will be relied on?

Sixth Deadly Sin –Keeping no or few MX Records

Why is keeping no MX Records a Deadly Sin?

What resources are needed for record keeping?

Seventh Deadly Sin –No internal alignment

Story #1• Who’s driving the train?

How is MX sold?• FUD

• Vendor expense accounts Who spends more time with Vendors?• Employee with 500 MX Renewals per year?

• IT Management

• Other Business Unit Stakeholders

Seventh Deadly Sin –No internal alignment

Why is non-alignment a Deadly Sin? How can the Customer address non-

alignment?• Financial data

• Performance data

• Description of IP grants and i-Limits

• Cross-functional teams

• MX goals

• MX plans

Other Deadly MX Sins

IP grant does not allow for flexibility with MX (no self MX, no 3rd party MX, or combinations)

Billing in advance rather than arrears SW license not separated from MX MX not stoppable without re-

instatement fees MX not partitionable, parkable

Other Deadly MX Sins

MX not based on Customer requirements Customer template not used for MX

agreement Customer not require Vendor to provide

Root Cause Analysis for MX failure Customer not requirement Vendor to

provide copy of MX data it collects Not managing MX as an IT service project

Questions?