& What YOU Can Do About It! · 8/6/2009 · Steven Brower , Esquire ´Litigation shareholder with Buchalter Nemer ([email protected]) in Orange County, California ´30 years

IT Litigation & the ‘Bad’ Contracts That Foster Failure…& What YOU Can Do About It!

© 2006-2009 by Warren S. Reid All Rights Reserved 1

Warren S. Reid, Managing DirectorWSR Consulting Group, LLCManagement, Technology, e-Business & Litigation Consulting

E-mail: [email protected]: www.wsrcg.comOffice: 818/986-8842

IT Litigation & Contracting for LawyersMCLE 3.5 hour presentation

Part I. Why Systems Fail?Part II. The IT Contract & the Systems Life CyclePart III. IT Related Contract ClausesPart IV. More Contract Clauses: IT and General

By Steve Brower, EsquireBuchalter Nemer PLC, ShareholderE-mail: [email protected]: www.buchalter.comOffice: 714/549-5150

Steven Brower , Esquire

Litigation shareholder with Buchalter Nemer([email protected]) in Orange County, California

30 years of litigation experience emphasizing InsuranceCoverage, Technology Litigation and Intellectual Property,but also covering fraud, contracts, real estate, libel, homeowner's associations, malicious prosecution

Trials, mediations, arbitrations in more than 10 statesRecent appeal, credited as the first in the United States,

where the Court of Appeal ordered a default, on fraud, infavor of his client

Credited as the first attorney in the US to get a civilinjunction under 18 USC 1030 (Computer Fraud & Abuse Act)

First published use of the term "software malpractice"Presented formal paper to the Association of Computer

Machinery on Computer Contracting in 1982Mainframe computer programmer for 10 years in Cobol,

APL, RPG II - one of the first public users of the Internet,with access since 1973

2 s2 m

Warren S. Reid16 years as IT consultant PartnerDesigned/implemented/contracted myriad systems1988, founded:

WSR Consulting Group, LLCConsultants/Experts in Computers & Software

Projects have included: Helping launch FEO for Pres. Carter in 75 daysOversaw acceptance of CA’s Lotto in 100 daysHelped resurrect MESDAQ: day 1 failure.

Extensive industry experience including:Retail industry, grocery, fast foodPOS systems of all kindsE-business and e-commerce systemsHealth care, hospital and HIPAA systemsRobotics and smart buildings, and more

MS & MBA: Wharton Grad School Finance Developed seminal “IT Success Models”

Part of 3 USC graduate school programs2 law school programs in IT ContractingMany peer-reviewed articles/book co-author

Testifying expert/expert witness in matters re:The root causes of system failureERP project/sw: development; implementation; estimating; scheduling; resourcing; project mgtSystems Development Life Cycle (SDLC) issues Systems/software testing & acceptanceIT contract intention, meaning & interpretation SW QA evaluation & fitness/usability purposeSoftware requirements elicitation & controlValuing IT assets, systems and companies

Testify: State/Fed Courts; Court of Fed ClaimsExpert Witness for “Who’s Who” of international business incl:

U.S. Dept of Justice & Pres. William ClintonAn Asian Stock Exchange; Pepsico; Her Royal Majesty, the Queen of England;Compuserve; Fortune 500 retailers; Big -8 Consulting FirmsERP software developersMany more.

3 w© 2006-2009 by Warren S. Reid All Rights Reserved2 m

Standish Group: Chaos Study Results 2004+

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CHAOS Summary 2009:+ success = 34% (delivered on time, budget, on target)

+ challenged = 44% (late, over budget, < required F&F)

+ failed = 24% (cancelled before complete; delivered & never used)

“… numbers represent downtick in success rates from previous study, and significant increase in number of failures … low point in last five study periods & highest failure rates on over a decade.

3 m

Standish Group: Chaos Study Results 2004+

http://www.infoq.com/articles/Interview-Johnson-Standish-CHAOS;jsessionid=EC1E99A30C95AED4B9360D061F8E1980

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What is the Purpose of “Contract”??

© 2006-2009 by Warren S. Reid All Rights Reserved

TO ALLOCATE RISKS6 s3 m

CONTRACTS ALLOCATE RISKS http://www.wsrcg.com/SoftwareFailXpert.php

© 2006-2009 by Warren S. Reid All Rights Reserved 7 w4 m

System doesn’t workWe can’t use itSystem failed in fieldFundamental flawsThey s/have told usSystem is full of bugsLimited functionalityDeveloper failed @ SIPMPoor adviceUnqualified personnelWrong devel process

Customer changed mindClient people not trainedClient did not do BPROnly “two more months”They wouldn’t listenBad data/conversionCustomer kept change scopeCustomer failed @ SIPMPoor cust decision-makingWrong client peoplePoor client support


ItIt’’s the Same in Virtually Every Litigation s the Same in Virtually Every Litigation …… All Over the World!All Over the World!

““He SaidHe Said …… She SaidShe Said””

Oftentimes, BOTH sides are right & contribute to failure – but at different %sSMART: Specific, Measurable, Attainable, Relevant, Trackable

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Standish Standish Group Group ––1995:1995:“18% of all sw projects fail due to unclear objectives & incomplete reqmts & specs”

Would you think it is more, or less, today?


Customer Requirements: Customer Requirements: …… Still Critical!Still Critical!

3 m

Why Are Requirements So Hard… Still?


Three SourcesF&F*; (B&D**); specified or implied“-abilities”; Sys Design & UI:

DD DI DNDNA

Current and futureBusiness CaseBiz processes; Biz rules; Rules engineOperations parms; Doc mapAccept Criteria; RTM; Gaps/Changes; RolloutTarget maintDefect metricsQAMore

11 w© 2006-2009 by Warren S. Reid All Rights Reserved ** B&D: Breadth & Depth* Features & Functions4 m

What is it?$, Schedule, Requirements, QA?Some MTBF?First to Market?Lowest Total Cost of Ownership?Get next round of financing?Meet biz Case, ROI, growth w less staffing?Better customer service?

Is it being done? Correctly?Vague, not measurable, afraid to commit (limit)Not used as benchmark for requirements “chill”

Acceptance Criteria (Post GL maintenance and enhancements) [Did you check References?]


Scale FactorsPrecedentednessDevelopment FlexibilityArchitecture/Risk resolutionTeam CohesionProcess Maturity

Cost DriversPersonnelAnalyst Capability (ACAP)Analyst Experience (AEXP)Programmer CapabilityPlatform Experience (PEXP)Language and Tool Experience (LTEX)Personnel Continuity (PCON)

ProjectUse of Software Tools (TOOL)Multisite Development (SITE)Development Schedule (SCED)

PlatformTime Constraints (TIME)Main Storage Constraints (STOR)Platform Volitility (PVOL)

ProductRequired reliability (RELY)Database Size (DATA)Product Complexity (CPLX)Required Reusibility (RUSE)Documentation match to lifecycle needs (DOCU)


©© 20062006--2009 Warren S. Reid All Rights Reserved2009 Warren S. Reid All Rights ReservedThis model will change and be updated over timeThis model will change and be updated over time 1414 ss

Risks Known BEFORE Project Starts!Risks Known BEFORE Project Starts!PeoplePeople/Resource Risks/Resource Risks

Turnover, culture, x-comm.Top Mgt Commit; Proj ChampPartner; Ref. Checks/Ref’s Refs

RequirementsRequirements RisksRisksPoor Project CharterDefined, Baselined, Implied

Stability, ComplexityIncomplete, Misunderstood, GallopI’faces, Data Conversion

TechnologyTechnologyHW, SW, Net, D/B, Internet, MobileSecurity; Privacy

C – CorrectnessI – IntegrityA – Available

Tool avail? mature? train? use?

ProjectProject & Tech Mgmt Risks& Tech Mgmt RisksClient, Client, DeptsDepts, Users, IT, Vend, O/S consults, , Users, IT, Vend, O/S consults, attys, attys, custscusts, analyst, , analyst, mktmkt ““expectationsexpectations””Unclear Leadership Unclear Leadership –– SIPMSIPM

ProcessProcess RisksRisksProject underProject under-- or or mismis--estimatedestimatedSEISEI--CMMi CMMi level; level; ETC &EVM ETC &EVM StdsStdsSched, $$, estimates, change controlSched, $$, estimates, change controlNot enough time for testingNot enough time for testingShortcuts to SDLC Shortcuts to SDLC on the flyon the fly

ProductProduct & Other Risks& Other RisksPerformance, testednessPerformance, testedness & readiness& readiness--abilitiesabilities (scale, use, test, port, maint)(scale, use, test, port, maint)Competent T/O proc, Competent T/O proc, suptsupt, maint?, maint?competcompet; economy; org; regulatory; economy; org; regulatory

If you know beforehand… Plan, Contract for, Mitigate, Monitor, Manage Them!

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What Can Possibly Be Misunderstood?!What Can Possibly Be Misunderstood?!…… Everything!Everything!

People are differentPeople are differentPeople have different:People have different:

Objectives, perspective Objectives, perspective Cultural bias, exp/Cultural bias, exp/educeduc/expertise/expertiseStyles of understanding/Styles of understanding/communicatcommunicat’’ggAbilities, talents, logic, creativityAbilities, talents, logic, creativityUnderstanding of prioritiesUnderstanding of prioritiesFears: spoken and unspokenFears: spoken and unspokenUnderstanding of what is subjective v objectiveUnderstanding of what is subjective v objectiveImplied/understood unspokenImplied/understood unspoken (needs, (needs, reqtsreqts, sizzle), sizzle)

So, what won’t be misunderstood?

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“We THOUGHT … Contract SAYS”©2006-2009 by Warren S. Reid All Rights Reserved

There’s more to THE Sys than A sys (SOS):$$ limits; penalties; ownership; holdbacks;remedies; liability limits; privacy; hot sites

Costs/Pymts; ADR; TERMinate; Renew;Title; X-hire; Site prep; Install hw, sw,

nw, BPR; confid;$ protect; Liablimits & exclusions

13. OtherWhat’s acceptable? Checklist? Vote?ALL Systems Go!12. Go-Live “Parole evidence” rule; 4 corners onlyProposals, workproduct, promises 11. $$ = Mouth? T/Over stds? Work stds? LTCO? SLA?Maint, upgrades, fixes 10. & Tomorrow?

Exist? Imply v spec? Depth? UI (DD, DI,DN, DNA) Maintainable? Signoff Procs

Key Deliverables: QA; Train; Doc;It Works!

9. More Min Reqts

Who? How? When? Where? Criteria?Accept Testing Process8. Min ReqmtsResults NOT Resources; “Success” definSys integ/interface/Test/Convert 7. U prove 1stConfig, SDLC, PM, est, test, I’face, maintCustom programming services6. Just for ME

WBS, estim, staff, delivs, PM, SDLC, bugsConduct of project5. How We Do It?

RM? Dispute escal/resol? HR reqts?Roles & responsibilities4. Who Does what?Scal- Port- Avail- Maint- Use- SMART Performance reqmts3. How well?… as per specs dated _____Functional requirements2. What works?

Bounds scope; Uber-themeSystem description1. Suitable

What the Contract Says:What was Understood:# Category

16 s12 m


Why Are Contracts (K) So Important?

Caveat:Caveat: “Standard K form” favors V/large Ks; used as sub for good mgt/K activCaveat:Caveat: K language often incomplete & ambig; drafters gone; shelf death

Clear & explicit delineation of Party rights, obligations & expectationsRequires ID, negotiation, appreciation others’ views, beliefs & objectives BEFORE dealGenerally produces much better :better :

working relationship during sane & emergency/surprise momentsprospect of proj success ($, ($, SchSch, F&F, QA, SH, Risk;, F&F, QA, SH, Risk; <costs, staff, inv; > C serv, mkt share)

Must be a living document Must be a living document –– able/willing to adapt to changesable/willing to adapt to changes

Best K team knows: risks risks allocalloc, , finan. resp, strong sense of VALUE,strong sense of VALUE, law skillSo, Best Team has: CXO,CXO, CFO,CFO, biz domain & tech eng/consult,biz domain & tech eng/consult, lawyer

Matters of: Matters of: Fact,Fact, Law, EviEvidencence, Risk,, Risk, TechnologyTechnology

& Why Must YOU Know About Them?

4 m

Introducing: The IT Contracts ModelAllocate Risks; Keep On Target; Helps Lead to Project Succes

© Copyright 1998 – 2008 By Warren S. Reid and Richard L. Bernacchi, Esq. All rights reserved

The IT Contracts Model ties together seminal work of:

Richard (Dick) Bernacchi, Esq.,

Partner Emeritus from Irell & Manella, LLP

A founder of the Computer Law field, and

Warren S. Reid, CMC, CFE, CSQE, CSTE

IT expert w 40 years experience in IT contracts, litigation & expert witness areas.

Model ties key tasks, decisions, deliverables & quality aspects of SystemsDevelopment Life Cycle with related, key IT contract clauses.

The IT Contracts Model was created to enable vendors, integrators, PMs, executives& SMEs to better understand where/how they fit into the IT contracting process & toallow them to make informed & measurable contributions to IT Contract Team.

© 2006-2009 by Warren S. Reid All Rights Reserved18 w

*SDLC: Systems Development Life Cycle

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The Systems Development Life Cycle: SDLC

All good methodologies are the same!” WSReid

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The Systems Development Life Cycle: SDLCBasics Set Stage

RecitalsSystems Description

General ProvisionsParties To The ContractGeneral Reps & WarrantiesDefinition Of TermsAssignment Of DelegationInterpretation Of Agreement

Functional Rqmts/Performance MeasureProject Management

Project TimetableProject Management & ReportingProject Costs & Schedule Payment

Pre-Go Live ItemsSite PreparationSystem Configuration & InstallationTrainingDocumentationLow Level, System & IntegrationAcceptance Testing

Customize & ConvertCustom Programming RequirementsConversion & Support Services

PersonnelMaintenanceWarrantiesOwnership & Protection

TitleLicense RightsProprietary Rights IndemnityConfidentiality & Security

Risks & RightsRisk Of Loss/DamageInsurancePrice ProtectionRenewal OptionsPurchase OptionsTrade-In Rights

Termination & ADRTerm & TerminationLimits & Exclusions Of LiabilityTaxesMiscellaneous ProtectionsDispute Resolution Mechanisms

Special Outsourcing Considerations

20 w2 m

The Systems Development Life Cycle (SDLC) & Its Relationship to the “Successful” IT Contract

Systems DescriptionFunctional Reqmts & Perform MeasureProject Management

Project TimetableProject Management & ReportingProject Costs & Schedule Payment

Pre-Go Live ItemsSite PreparationSystem Configuration & InstallationTrainingDocumentationLow Level, System & IntegrationAcceptance Testing

Customize & ConvertCustom Programming RequirementsConversion & Support Services

PersonnelMaintenanceWarrantiesSpecial Outsourcing Considerations

Basics Set Stage

RecitalsGeneral Provisions

Parties To The ContractGeneral Reps & WarrantiesDefinition Of TermsAssignment Of DelegationInterpretation Of Agreement

Ownership & ProtectionTitleLicense RightsProprietary Rights IndemnityConfidentiality & Security

Risks & RightsRisk Of Loss/DamageInsurancePrice ProtectionRenewal OptionsPurchase OptionsTrade-In Rights

Termination & ADRTerm & TerminationLimits & Exclusions Of LiabilityTaxesMiscellaneous ProtectionsDispute Resolution Mechanisms

Lawyer Side IT Management,

Expert Side

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Model III. The IT Contracts Model for Successful Contracts (Top Level)


© 2006-2009 by Warren S. Reid All Rights Reserved 23 w

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The IT Contracts Model for Successful Contracts (Broken down – Lawyer side)

Lawyer Side

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The IT Contracts Model for Successful Contracts (Broken down – IT side)


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3. FUNCT RQMTS & PERFORMANCE MEASURES (B)3.1 Desc of biz funct to be performed (or x-ref to RFP)3.2 Rqmts Elicitation (RE)/Scope Change (s) Process - ID specif Users/Classes; assure/sched availability - Prep timeline; ID RE technq/tools/docs used/produced - Escalation/dispute resolution process - Scope s process: proposed, est all impacts, decis crit, doc, update ests, CPM, staff, monitor - Embrace change: Iterative, Incremental, interactive

3.3 Incorp of Functional Requirements Docs - Rqts incl: success crit; '-abilities'; F&F current/future; UI; rpts; biz procs & rules; ops parms; doc map; RTM; GAPs/ss; rollout plan; test results; sys.stability; Go- Live checklist; rqts s process/tools; defer/tradeoff; training plan; converted data; legacy I'face; security passw ords; enabled Ops/ Maint. Groups, etc

3.4 Incorp of V’s proposal(s), w ebsite, marketing matl, etc.3.5 Performance Parameters: a. Relationship to functional processing rqmts. b. Types & volumes of data to be stored c. Number of users; Locations d. Special features or capabilities e. Hosting, SaaS, other service act w trial period g. Use by aff iliates h. Transfers to other CPUs or locations i. Right to make copies, incl bkup or archiv copies j. Grow th cap meas'ed in increas tranx process rate k. Capacity for f ield modification or enhancement l. Other V representations

3.6 Performance "-ABILITIES" SW QA: ['-abilities'] hw , sw, nw , architecture USERS (Extl): Avail- Depend- Flex- Integ-

Oper- Reli- Modif- Use- Scala Safety Secur- Surviv- R&R- Config- Utility; $ Effect [vs benchm'ks] DEVELS (Internal): Adapt- Audit- Deploy- Reuse- TInterop- Maint- Perform- Port- Extense- Struct- Manufact- Trace- Reuse- TEST- Struct-3.7 Relationship to acceptance criteria & testing3.8 Relationship to ongoing maintenance reqmts

33.1 Biz Considerations, & RISKS (H)33.1a “59% of all O/S Ks fail” (Compass '05; Forrester 33.1b SOX/Regs adherance; No subbing to China33.1c Think w /cost 70-80% less but only profit 20-30%. In fact, most report 1st year savings of 0%33.1d 'Please You; Don’t Ask?'; 90% of time w /say "OK"33.1e Time Zone diff; Infrastructure poor; 22 official too many polit parties; Turnover by 33.1f Security/privacy laws; cyber crime; terrorism33.1g M/have both orgs' staff on both sites; Build trust33.1h Define Success (iterative, incremental, 33.1i. OS in internat'l market w /o int. ops exper 33.1j No variety of perspectives in selection process33.1k Using poorly devel/documented serv/prod spec33.1l Not doing biz/financial due diligence on OS candid33.1m Insuff knowledge of OS capacity limits33.1n Not resolv'g ops issues b4 move to K legal 33.1o No full com plan in effect; no escal, reg sch

33.2 Contract ("K") Considerations (H)© 2007 Michele Kane, Wendy Gross all rights reserved33.3 Train both Cust & OS mgm't & operations on O/S K33.4 Proc to initiate/request new service, s , projs33.5 Right to use 3rd party OS to in-source/re-source33.6 Control of arch, tech, and org change stds33.7 O/S obligs to update w tech advances; refresh tech33.8 SLAs (how they wk, credits, contin improv oblig, s33.9 Commitments regarding supplier personnel 33.10 Financial terms 33.11 Ownership of custom devel/other work product 33.12 Term; terminat'n assist services/termin rights33.13 Min retent'n per for transit'ned (T) & LT key Ees33.14 Diff for single silo outsourc'g than for “big bang” t33.15 Keep staff knowl in: apps, biz, in-scope tech, procs to33.16 K provisions to secure appropriate supplier talent33.17 K provisions to limit use of subs (e.g., to China)33.3 Change process: biz, staff, tech, ind stds, laws, 33.18 Limit unnecess charges: data recovery; serv re-pe33.19 Baseline OS resources for ongoing suppt & projs to allow C to re-priorit/assign OS services/resources 33.20 K s/req OS to track: asset type/loc, ID, ser/model #s, in serv date; sw/hw vers/upgrades; if own: lease, licen/fin resp pty; Tie apps to servers; Log ss 33.21 Coop Oblig: betw OS/C/3rd parties; staff; facilities, equip, sw, doc, biz process access; Adding new OSs;33.22 K cost reduct'n commits, process improv; Stds im33.23 Service level improv (esp if SLAs met but serv uns33.24 Terminat'n assist: doc plan; staff; all equip, sw, matl, data, 3rd pty Ks/ tools to prov serv; train C/ 3rd pty in equip, sw, tools; Right to employ OS staff; Right to 33.25 Counsel’s role does not end when deal signed!

17. MAINTENANCE (G)17.1 Start date/maint period17.2 V’s termination rights17.3 Required notice for termination17.4 B’s renew rights for guaran period17.5 Relat’shp to performance measures17.6 Types & Desc of maintenance support17.7 Notice of defects or problems17.8 Classif ic of ty pes & criticality of maint probs17.9 Required dispatch or respond time(s)17.10 Escal of maint suppt if delays to correct probs17.11 Maximum repair time17.12 Uptime guarantees17.13 Replacement of “lemons”17.14 Avail of spare parts or components17.15 Limits on Vs refurbishment rights17.16 B’s rights to perform maintenance17.17 B’s rights to maintenance manuals17.18 B’s rights to maintenance training17.19 Limits on B’s rights to perform maintenance17.20 Remedies for delays in providing adeq maint17.21 V’s obligation to coordinate third party maint17.22 B’s right to get maint o/s pr incipal maint period17.23 Limits on increases in maintenance fees17.24 B/U equip avail during extended maint periods17.25 B’s rights to f uture enhancements17.26 B’s rights to assign maintenance rights

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Savvy MIS/IT Contracts that: Allocate Risks, Keep You on Target, Help Lead to Success© Copyright 1998-2008 By Warren S. Reid & Richard L. Bernacchi, Esq. All rights reserved

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Remedies©2003-8W arren S. Reid

8. CUSTOM PROGRAMMING SERVICES (E)8.1 Incorp of functional processing rqmts docs8.2 V’s obligation to develop custom apps8.3 Relat’shp to stipulated performance measures8.4 Relat’shp to proj timetable8.5 Development by V of detailed design specs8.6 Review /approval by B of detailed design specs8.7 ID B's resp to create, dev, link, test new BPR8.8 Prog stds spec; x-ref to sys, prog, user docs std 8.9 Specif ication of change order procedures8.10 X-ref to system & acceptance test provisions8.11 V’s responsib for acceptable unit/sys test procs8.12 V’s obligat'n to deliv source code & related docs8.13 Relat’shp to proj timetable8.14 Remedies for delays in completion8.15 Relat’shp to termination rights

9. CONVERSION & OTHER SUPPT SERVICES (E)9.1 Data convert: plan, cleanse, map; load; audit; S/O9.2 Data & Apps sched, resources, conversion9.3 Development of test data9.4 Assist to B w ith site acquisition &/or prep9.5 Assist to B in acquiring other products/services9.6 Assist to B in locating & screening employees9.7 Coordination of telecom procurement9.8 Responsibility for trouble-shooting9.9 Assist to B w ith development of backup plans9.10 Assist to B w ith backup arrangements9.11 Assist to B in developing security plan9.12 Assist to B in develop'g disaster recovery plan9.13 Pre-installation machine time

16. WARRANTIES (G)16.1 V’s f inancial condition16.2 hw w arranties16.3 sw w arranties16.4 Service w arranties16.5 Pass through of third party w arranties16.6 Relat’shp to performance measures16.7 Start date(s)/length of w arranty period(s)16.8 Relat’shp to maintenance provisions16.9 Scope of w arranty obligations16.10 Remedies for failure to meet w arr obligs16.11 Assignability of warranties16.12 Relat’shp to disclaimers/Limits of V’s liabs

22. RISK OF LOSS/DAMAGE (J)22.1 During shipment22.2 After shipment22.3 Cross-reference to insurance provisions

23. INSURANCE (J)23.1 V’s obligations to provide insurance23.2 B’s obligations to provide insurance23.3 Types & scope of coverage23.4 Acceptable underw riters23.5 responsibility for payment of premiums23.6 responsibility for processing claims23.7 Relat’shp to Limits of liability

24. PRICE PROTECTION (J)24.1 Limits on future price or fee increases24.2 Disc'ts on future procurem'ts & period of Avail24.3 Most favored cust treatment & period of Avail24.4 Guaranteed prices & period of Avail24.5 Relat’shp to trade-in provisions

25. RENEWAL OPTIONS (J)25.1 Renew al of hw maintenance support 25.2 Renew al of sw maint &/or enhancem't support25.3 Lease renew al(s)25.4 Calc of charges or fees w /i renew al period(s)

26. PURCHASE OPTIONS (J)26.1 Guaranteed prices & period of Avail26.2 Credits for rent or lease payments26.3 Method of exercising option26.4 Assignability of options26.5 Relat’shp to accept (AT), w arranty, maint provis

27. TRADE-IN RIGHTS (J)27.1 Right to upgrade to new avail hw /sw ; avail per'd27.2 Right to upgrade to curr avail hw /sw & avail per27.3 Calculation of trade-in credits27.4 Relat’shp to compatibility representations27.5 Relat’shp to guaranteed or future discounts27.6 Relat’shp to perform meas, AT, w arr, maint provis

SET STAGE1. Recitals

2. System Desc

PROJECTMGMT (PM)

STAFFING CUSTOMIZE &CONVERT

PRE GO-LIVE ITEMS

10. TRAINING (D)10.1 V’s obligation to provide training10.2 Qualif ications of trainers10.3 Location of training10.4 Stds for acceptable performance10.5 Relat’shp to timetable10.6 Relat’shp to proj costs10.7 Availability of student matls10.8 Avail of instructor’s matls & training10.9 Number of trainees10.10 B’s rights to reproduce & use training matls10.11 Continuing Avail of std V classes10.12 Continuing Avail of on-site training by V10.13 Remedies for delays in provid suitable train

11. DOCUMENTATION (D)11.1 Desc of types of docs11.2 Doc stds for user, system & program docs11.3 Relationship to proj timetable11.4 Relationship to performance measures11.5 B’s rights to reproduce docs11.6 B’s rights to future docs or enhancements11.7 B’s rights to source code & related docs11.8 Remedies for delays or inadequate docs

TERMINATION& ADR

RISKS &RIGHTS

OWNERSHIP&

PROTECTION

SERVICE POSTGO-LIVE

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& TEAM

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ComputerContract

Collaboration(c) 1991-2008

RLBernacchi, WS Reid

12 . PROJECT COSTS & PAYMENT SCHED. (C)12.1 Hw prices , if purchased (incl “bundled” sw )12.2 Sw prices , if purchased (& if 2b stated sep12.3 Rental or lease pymts & method of calc12.4 License fees for softw are and applications12.5 Training fees; Refresher train'g devel & fees12.6 Maintenance fees for equipment and/or sw12.7 Fees/$ for addl serv ices (hos ting; SaaS; BU)12.8 Partial pay ments tied to major miles tones12.9 Start date for rental or lease payments12.10 Commenc ement date for license fees12.11 Commenc ement date for maintenance f ees12.12 Credits or offsets f or delays or failures12.13 Refunds if Contract is terminated12.14 Most favored nation clause12.15 No mods/addtl charges w /o w ritten approval12.16 Invoic ing procedures12.17 Supporting doc s12.18 Required notic e for price increases12.19 Personnel/serv ices rates to price chg orders12.20 Limits on price increases12.21 Right to benefit of price reduc tions12.22 Relationship to Contract remedies12.23 Payments under protest12.24 Offset rights12.25 Relat’shp to dis pute resolution mec hanisms

28. TERM & TERMINATION (K)28.1 Initial term of K(K) 28.2 Renew at Term(s)28.3 Def of breach by V 28.4 Def of breach by B28.4 Definition of breach by B28.5 Notice of breaches & cure provisions28.6 Termination by V for breach by B28.7 Termination by B for breach by V28.8 Termination by V or B for insolvency/BK28.9 Obligs of V & B to assure smooth transition28.10 Survival of certain provisions29. LIMITS & EXCLUSIONS OF LIABILITY (K)29.1 Express/ implied w arr disclaim not inc in K29.2 Exclusion of consequential damages29.3 Limits on V’s liabilities 29.4 Limits on B’s liabs29.5 Xcept'ns to disclaimers, exclusions/Limits30. TAXES (K)30.1 Responsib for sales/use & prop taxes, etc.30.2 Right to contest & indemnity30.3 responsibility for f iling returns30.4 responsibility for interest & penalties30.5 Investment tax credit representations30.6 Remedies for breach invest tax credit reps31. MISCELLANEOUS PROVISIONS (K)31.1 Avail of spare parts31.2 Specs for & Avail of supplies31.3 Covenant not to solicit employees31.4 Performance bonds31.5 Applicability of UCC31.6 Rules re publicity 31.7 Quiet enjoyment32. DISPUTE RESOLUTION MECHANISMS (K)32.1 Mediation by designated party reps32.2 Arbitration a. Types of disputes & method of initiating b. Location; c. # of arbitrators ("arbs") d. Qualif icat'ns of arb(s) e. Arb selection f. Compensation of arbitrators g. Arbitration rules & procedures h. Provisional remedies i. Discovery rules j. Rules of Evidence k. Funding of arbitration costs 1. Reimbursement of costs & fees m. Governing law n. Briefs o. Findings & conclusions q. Rendering & enforcement of aw ard32.3 Use of sys pending resolution of disputes

The “HE SAID… SHE SAID…” Chart – for Failed Software Projects

K Area X-Ref SDLC Step Category:

“-abilities” What Users, Acquirers,

In-house IT Dept Teams Say: What Vendors, Software Developers,

Sys Integrators Say:

2, 3 Biz Case/Reqts Feasibility Feasibility System doesn’t work; Not

what we wanted You changed your minds; You don’t

know what you want/need; Not viable

3, 8 Reqts Elicit/ Scope Mgmt Capability You delivered limited

functionality/performance You continually changed project scope

3, 14, 15

BPR/ Accept Test

Compatibility The system failed in the field & in production

You didn’t perform required ‘business process reengineer’ to make it work

1, 2, 3 Recitals/ Feasibility Credibility

Your software, services & expertise were oversold

You conducted ref checks & Due Diligence; What didn’t you do/know?

10, 11 Training/ Implement

Usability No one can use system! Poor training

“Required staff” never came to primary/refresher training

1, 14,15 Selection Stability System fundamentally flawed We only need 2 months to fix it all

4, 5, 12, 13

Project/Risk Mgmt

Culpability You never told us that! You gave poor advice!

You didn’t follow our recs; You changed/delayed making decisions

8, 9. 14, 15 Testing Reliability The system is full of bugs!

Bad data conversion/interface cause probs. Always have bugs!

4, 5, 12 Project Mgmt

Responsibility You failed as Systems Integration Proj. Mgr. - SIPM

No! YOU failed as the SIPM. That role was not my job!

13 Staffing Availability Bait & Switch! Staff unqual, hi

T/O, poor PMs, Steer Com YOU bait & switch! Staff unqualif’d, hi

T/O, poor PMs, Steer Com

11 Planning/ SDLC Suitability You stopped good PM & Sys

Dev Life Cycle (SDLC) method You were unwilling to comply w

agreed to/promised/necess methods

3. Funct Rqmts &Perform Measures

4. Project Timetable5. Proj Mmt & Reporting

12. Proj Costs & Pay Sched

6. Site Prep7. Config Deliv/Install10. Training 11. Docs

14. Lower Level Tests15. Accept Tests

8. Custom Prog Services9. Convert/Other Suppt Serv13. Personnel

16. Warrantees17. Maintenance

18. Title 19. License Rts20. IP Rights Indemnity21. Confidential/Secure

22. Loss/Damage Risk23 Ins 24. Price Protect

25. Renew Opts 26.Purch Opts 27. Trade- in

Rights

28. Term/Terminat'n29. Limits/Excl to Liab

30. Taxes 31. Misc32. Dispute Res Meth

11. General Provisions:- Parties - Gen'l Reps/Warranties

- Definitions - Assignment -Interpret'n

11. GENERAL PROVISIONS (L)I. Parties to 'Contract' (L)i.1 Correct legal names i.2 Principal places of bizi.3 Legal Relat’shp to other entities involved in tranxi.4 State or jurisdiction of incorporat'n/formation.i.5 Authority of signatories

II. General Reps & Warranties (L)ii.1 Legal status of entity ii.2 Auth to enter into Kii.3 No conflicting agreementsii.4 No legal impediments ii.5 No brokers/agents

III. Definition of Terms (L)IV. Assignment or Delegation (L)iv.1 Restrictions on assignment &/or delegationiv.2 Exception for aff iliated entitiesiv.3 Exception for business reorganizationsiv.4 Except'n for sale or transfer of substant all biziv.5 Consents not unreasonably w ithheld

V. Interpretation of Agreement (L)v.1 Entire agreement v.2 Governing lawv.3 Venue of litigation or arbitrationv.4 Consent to in personam jurisdiction of courtsv.5 Situat'n making liquidated damages reasonablev.6 Joint participation in draf ting of Kv.7 Partial invalidity; severabilityv.8 Remedies not exclusivev.9 Number & gender v.10 Waivers

L

If you go to court,you've already

lost

ContractsALLOCATE

Risks

Contracts 'Incentivize' Parties to Cooperate

Contracts taketime, $, hard work

Contracts arean SDLC STEP

Contracts areNEVER Perfect

Contracts force partiesto understand objectives

You can define "SUCCESS" either BEFORE contract issigned or AFTER delivery. BUT IT WILL BE DEFINED!

GENERALPROVISIONS

NUTS: Not UsingThe Standards

U-CRINGE: Unplanned Chang'gRqmts IN-validate GoodEconomics/Engineering

18. TITLE (I)18.1 V’s reps as to ow ner/rights to transf hw /sw18.2 Transfer of title to hw18.3 Retention of security interest18.4 Execution of security docss18.5 Release of security interest upon payment18.6 Title xfer to sw (or x-ref to licensing provis)18.7 Ow ner/license/mkt rights to V made sw mods18.8 Ow ner/license/mkt rights to B made sw mods18.9 X-ref to license & authorized use provisions18.10 Rights to use ideas/invent'ns devel dur'g proj

19. LICENSE RIGHTS (I)19.1 Exclusive or non-exclusive rights19.2 Term of license19.3 Products covered19.4 Types of use permitted: a. Types of equipment b. Number of CPUs c. Number of users d. Types of apps e. Timesharing or service bureau activities f . Locations g. Use by aff iliates h. Transfers to other CPUs or locations i. Right to make copies, incl bkup/archiv copies19.5 Rights to source code &/or hw mainten docs19.6 Relat’shp to assignment rights19.7 Relat’shp to V’s termination rights

20. PROPRIETARY RIGHTS INDEMNITIES (I)20.1 V’s indem vs infring: patent/ (c)/ trade sec/IP20.2 Notice of claims20.3 V’s obligation to defend20.4 B’s obligation to cooperate20.5 B’s right to participate in defense20.6 V’s oblig to replace/modify infringing products20.7 V’s rights to remove infringing products20.8 Calc of B’s refund for products removed by V

21. CONFIDENTIALITY & SECURITY (I)21.1 Definition of V’s confidential information21.2 Definition of B’s confidential information21.3 Scope of V’s obligs for confidentiality/security21.4 Scope of B’s obligs for confidentiality/security21.5 Remedies for breach21.6 Relat’shp to termination provisions

1. RECITALS (A)1.1 V’s areas of expertise, experience, etc.1.2 B’s business & data processing rqmts1.3 V’s ability or experience to handle B’s rqmts1.4 Spec/execut'n of a quality RFP process; req V services1.5 B’s issuance of Request For Proposals (RFP)1.6 V’s Response to B’s RFP; feasibil, honest, suitabl1.7 Addtl docs or communications betw een B & V1.8 Proposal eval factors & assumpts affecting B’s decis'ns1.9 Biz Case Discussion (?)

2. DESC OF SYSTEM (A)2.1 Desc/specs for equip, compo'nts, media, cable, etc.2.2 Configuration w arranty2.3 Desc & specs for sys sw; current; complete; usable2.4 Desc & specs for packaged apps sw2.5 Desc & specs for custom mods to packaged apps2.6 Desc & specs for custom sw apps to be devel by V2.7 List & Desc of all manuals, system & user docs, etc.2.8 Incorp of RFP, proposals, brochures, mktg matls, etc.2.9 Sys Def (5 Rs: Right person; truck; tools; address; time)2.10 Definitions of other terms & Relationship to system2.11 Testing: proc; types; rqmt; tools; staff; doc; S/O; crit 2.12 X-refs to other K provisions & exhibits (inc Biz Case)

13. PERSONNEL (F)13.1 V’s staff quals/B’s approv rights; evals; courses; expe13.2 Application certif ied/certif icates; Updated CMMi rating13.3 Periods of Avail13.4 Prohibitions against interruptions in Availability13.5 Temporary replacements for sickness, etc.13.6 Right to request replacements13.7 Prohibition against removal or reassignment

A

4. PROJECT TIMETABLE (C)4.1 Definition of proj tasks4.2 Definition of deliverables for each task4.3 Estimating meth used; assumps; update procs 4.4 B’s responsibilities; V’s responsibilities4.5 Target completion dates by task4.6 Final completion dates by task4.7 B’s right to delay or cancel proj tasks4.8 Major perform milestones & relat’shp to pymt sch4.9 Delay remedies & bonuses for early perform4.10 Relationship to termination rights4.11 Prompt notice of anticipated delays

6. SITE PREPARATION (D)6.1 Preparation & delivery of site prep specs6.2 B’s (or V’s) obligation to prepare site6.3 V’s oblig to clarify specs, inspect & certify6.4 B’s obligation to approve6.5 Remedies for improper site preparation6.6 Remedies for inspection errors6.7 Effect on proj timetable

7. COMPUTER CONFIG DELIV & INSTALL (D) 7.1 Delivery of complete equipm't conf iguration7.2 Delivery of operating sys & other system sw7.3 Access to site7.4 Installation obligations of V7.5 Installation obligations of B7.6 Diagnost tests & relat'n to Accept Test provis7.7 Def of completion of equipment installation7.8 Remedies for delays in delivery or installat'n7.9 Relat’shp to termination rights

Contract Oxymorons- Clearly misunderst'd - Act Naturally

- Same difference - Exact estimate - Good grief - Test organization

0. BASICS (M)0.1 No such thing as a PERFECT contract (K)0.2 The PROCESS is key, NOT just the contract0.3 K is a LIVING doc; w illing to adapt to change0.4 K lang often ambig/incomplete; Drafters gone0.5 Clear/explicit delineat'n V/B rights, obligs, expects 0.6 Req. ID, negot, apprec others' view s, objs B4 deal0.7 Generally produces much better: a. work'g relat during emergency/surprise periods b. prospect of project success: i. $, Sch, F&F, QA, SH, Risk ii. < costs, staff , inv; > C serv, mkt share0.8 Best K Team know s: alloc risk; $ resp; law; value0.9 Best Team:CXO; CFO; Law yer; SME/eng xperts

14. LOW LEVEL, SYSTEM & INTEGRAT'N TESTS (D)14.1 Diagnostic tests of hw , infra, netw are14.2 All Kinds of Systems: End-User; MIS; Outsourced; Commercial; Military; Operating Systems (latent error stats avail)

14.3 All manner of tests for funct & '-abilities' incl: Dynamic tests - ~85% incl: - w hite/black box; sub-routine; unit; integ, system - Interface, data audit, test of/w converted data - new funct; regression; performance; capability; - Indep V&V; Viral, Security; Acceptance; Beta - '-ability' (use-, scal-, port-, maint-, reuse-, recover-, failover, stress, bullet & many more Static Tests - ~15% incl: - reviews; w alk-thrus; inspections

14.4 For each test level consider no. of tests and: - Goal, objectives, success criteria - Def of accept results to move to next test level - Test tools: decide, acquire, train; # test environs - Exper test staf f: leads, SMEs, analyst, testers, QA - Test: sched, train'g, environ, equip; access - Test results review : w ho, w hen, turnaround time - No. of shifts, def of scenarios; end-to-end tests - Std test docs; signoff; rigor & format of error logs - Rigor of error root cause id, est to f ix, f ix process - Test metrics to rept progress, issues and probs

14.5 Desc of error severity levels and time to repair each14.6 Escalation Process; SWAT - SW Adjudication Team14.7 Maintenance service during testing14.8 Relat’shp to performance measures14.9 Remedies for failure to meet test criteria14.10 Relat’shp to termination rights

15. ACCEPTANCE TESTING (D)15.1 Live or simulated environ; w new BPR15.2 Desc of test data & responsibility for prep15.3 Desc of test procedures & criteria15.4 Relat’shp to funct rqmts & perform stds15.5 Period of testing15.6 Review of test results15.7 Correction of errors & problems15.8 Definition of acceptance15.9 Remedies for failure to meet accept criteria15.10 Relationship to w arranty & maint provisions15.11 Relationship to termination rights

An ORAL contract isn't worth the paper itswritten on!

B

Balance liabil limits wessential purpose of

remedies

TheBARGAIN?

ABBREVIATIONS:K = Contract Pty = Party (to a contract)V = Vendor; B = Buyer BU = BackupSDLC = System Development Life Cyclesw = softw are; hw = hardw are; nw = netw areproc = process; proj = project LT = Long TermPM = Project Manager recs = recommendationsrelat'shp = relationship proc = process(es)s = delta = change Desc = descriptionRFP = Request For Proposal ID= identifyrqmt = requirement; RE = Rqmts Elicitation (proc)

5. PROJECT MANAGEMENT (PM) & REPORTING (C)5.1 Steering Comm role, structure, makeup, processes5.2 SWAT Team role, structure, makeup, processes5.3 Named Sys Integrator's role, resp, auth, accountability5.4 Desc of V’s project team; Desc of B’s proj team5.5 Designation of V’s PM; Designation of B’s PM5.6 Determ SDLC METHOD to be used; rules to deviate5.7 PM Tools/Measures: EVM; CPM; ETC; $/sch variances5.8 V’s resp for PM; proj rpt'g: format; freq; distrib; detail5.9 V’s/B's resp: BPR/new proc dev, link, train, test, approv 5.10 V’s resp to ID, manage, mitigate RISKS, probs, delays5.11 B’s responsibity to address V's probs/recs in proj rpts5.12 B’s responsibility to assist V5.13 B’s responsibility for project problems or delays5.14 Relationship to project timetable5.15 Remedies for loss/reassignment of V’s Proj Mgr (PM)

OutSourcing:M Kane, W Gross

H 33.1 Biz Consid's33.2 K Consid's

Model III. The IT Contracts Model for Successful Contracts (Detailed)http://www.wsrcg.com/PDFs/model_itcontracting.pdf

©© 20062006--2009 Warren S. Reid All Rights Reserved This model will chan2009 Warren S. Reid All Rights Reserved This model will change and be updated over timege and be updated over time 25 w3 m

This Model contains 32 contract clause areas.

NOTE: Less than half of these can be drafted by an IT contracts attorney alone. The others require thoughtful input from CXO(s), CFO, biz domain & MIS leads/ consultants

Functional Rqmts & Project Mgmt (areas: 3, 4, 5, 12)

Click for full size view of all contract areas:http://www.wsrcg.com/PDFs/model_itcontracting.pdf

© 2006-2009 by Warren S. Reid All Rights Reserved26 w1 m

This Model contains 32 contract clause areas

NOTE: Less than half can be drafted by an IT contracts attorney alone. The others require thoughtful input from CXO(s), CFO, biz domain & MIS leads/ consultants

PRE GO-LIVE ITEMS (areas: 6,7,10,11,14,15)

Click for full size view of all contract areas:http://www.wsrcg.com/PDFs/model_itcontracting.pdf


(A) Set the StageSet the Stage

1.8 Proposal evaluation factors & assumptions affecting B’s decisions

1.7 Additional docs or communications between B & V

1.6 V’s proposal response to B’s RFP; feasibility, honest, suitability

1.5 B’s issuance of Request For Proposals (RFP)

1.4 Specification/execution of a quality RFP process; required V services

1.3 V’s ability or experience to handle B’s rqmts

1.2 B’s business & data processing requirements

1.1 V’s areas of expertise, experience, etc.

1. RECITALS (A)

2.12 x-refs to other K provisions & exhibits (inc Biz Case)

2.11 Testing: proc; types; rqmt; tools; staff; doc; S/O; crit

2.10 Definitions of other terms & Relat’shp to system

2.9 Sys Def (5 Rs: Right person; truck; tools; addr; time

2.8 Incorp of RFP, proposals, brochures, mktg matls, etc.

2.7 List & Desc of all manuals, system & user docs, etc.

2.6 Desc & specs for custom sw apps to be devel by V

2.5 Desc & specs for custom mods to packaged apps

2.4 Description & specs for packaged apps sw

2.3 Desc & specs for sys sw; current; complete; usable

2.2 Configuration warranty

2.1 Desc/specs for equip, components, media, cable, etc.

2. DESC OF SYSTEM (A)

© 2006-2009 by Warren S. Reid All Rights Reserved28 s6 m

(B) What IS the Bargain?What IS the Bargain?

b. Types & volumes of data to be stored

a. Relationship to functional processing rqmts.

3.5 Performance Parameters:

3.4 Incorp of V’s proposal(s), website, market’g matl, etc.

passwords; enabled Ops/ Maint. Groups, etc

training plan; converted data; legacy I'face; security

Live checklist; rqts change process/tools; defer/tradeoff;

GAPs/changes; rollout plan; test results; sys.stabil;Go-

UI; rpts; biz procs & rules; ops parms; doc map; RTM;

- Rqts incl: success crit; '-abilities'; F&F current/future;

3.3 Incorp of Functional Requirements Docs

- Embrace change: Iterative, Incremental, interactive

decis crit, doc, update ests, CPM, staff, monitor

- Scope change process: proposed, est all impacts,

- Escalation/dispute resolution process

- Prep timeline; ID RE technq/tools/docs used/produced

- ID specif Users/Classes; assure/sched availability

3.2 Rqmts Elicitation (RE)/Scope Change Process

3.1 Desc of biz funct to be performed (or x-ref to RFP)

3. FUNCT RQMTS & PERFORMANCE MEASURES

3.8 Relationship to ongoing maintenance reqmts

3.7 Relationship to acceptance criteria & testing

Manufact- Trace- Reuse- TEST- Struct-

Interop- Maint- Perform- Port- Extense- Struct-

DEVELS (Internal): Adapt- Audit- Deploy- Reuse- Test-

Surviv- R&R- Config- Utility; $ Effect [vs benchm'ks]

Oper- Reli- Modif- Use- Scala Safety Secur-

USERS (Extl): Avail- Depend- Flex- Integ-

SW QA: ['-abilities'] hw, sw, nw, architecture

3.6 Performance "-ABILITIES"

l. Other V representations

k. Capacity for field modification or enhancement

j. Growth cap meas'ed in increas tranx process rate

i. Right to make copies, incl bkup or archiv copies

h. Transfers to other CPUs or locations

g. Use by affiliates

e. Hosting, SaaS, other service act w trial period

d. Special features or capabilities

c. Number of users; Locations


(C) Project ManagementProject Management

5.15 Remedies for loss/reassignment of V’s Proj Mgr (PM)

5.14 Relationship to project timetable

5.13 B’s responsibility for project problems or delays

5.12 B’s responsibility to assist V

5.11 B’s responsibility to address V's probs/recs in projrpts

5.10 V’s resp to ID, manage, mitigate RISKS, probs, delays

5.9 V’s/B's resp: BPR/new proc dev, link, train, test, approv

5.8 V’s resp for PM; project rpt'g: format; freq; distrib; detail

5.7 PM Tools/Measures: EVM; CPM; ETC; $/sch variances

5.6 Determ SDLC METHOD to be used; rules to deviate

5.5 Designation of V’s PM; Designation of B’s PM

5.4 Desc of V’s project team; Descrip of B’s project team

5.3 Named Sys Integrator's role, resp, auth, accountability

5.2 SWAT Team role, structure, makeup, processes

5.1 Steering Committee role, structure, makeup, process

5. PROJECT MGMT (PM) & REPORTING (C)

4.11 Prompt notice of anticipated delays

4.10 Relationship to termination rights

4.9 Delay remedies & bonuses for early perform

4.8 Major perform milestones & relat to pymt sched

4.7 B’s right to delay or cancel proj tasks

4.6 Final completion dates by task

4.5 Target completion dates by task

4.4 B’s responsibilities; V’s responsibilities

4.3 Estimating meth used; assumps; update procs

4.2 Definition of deliverables for each task

4.1 Definition of project tasks

4. PROJECT TIMETABLE (C)


(C) Project ManagementProject Management

12.18 Required notice for price increases

12.17 Supporting docs

12.16 Invoicing procedures

12.15 No mods/addtl charges w/o written approval

12.14 Most favored nation clause

12.13 Refunds if K is terminated

12.12 Credits or offsets for delays or failures

12.11 Commencement date for maintenance fees

12.10 Commencement date for license fees

12.9 Start date for rental or lease payments

12.8 Partial payments tied to major milestones

12.7 Fees or charges for other services

12.6 Maintenance fees for equipment &/or sw

12.5 Training fees

12.4 License fees for sw

12.3 Rental or lease pymts & method of calc

12.2 sw prices, if purchased (& if 2b stated sep

12.1 hw prices, if purchased (incl “bundled” sw)

12. PROJECT COSTS & PAYMENT SCHED12. PROJECT COSTS & PAYMENT SCHED (C)

12.25 Relat’shp to dispute resolution mechanisms

12.24 Offset rights

12.23 Payments under protest

12.22 Relat’shp to K remedies

12.21 Right to benefit of price reductions

12.20 Limits on price increases

12.19 Personnel/services rates to price chg orders


(D) PrePre-- GoGo--Live TasksLive Tasks


7.8 Remedies for delays in delivery or installation

7.7 Def of completion of equipment installation

7.6 Diagnostic tests & relation to Acceptance Test provision

7.5 Installation obligations of B

7.4 Installation obligations of V

7.3 Access to site

7.2 Delivery of operating sys & other system sw

7.1 Delivery of complete equipment configuration

7. COMPUTER CONFIG DELIV & INSTALL (D)

6.7 Effect on project timetable

6.6 Remedies for inspection errors

6.5 Remedies for improper site preparation

6.4 V’s obligation to inspect & certify

6.3 V’s obligation to clarify specs

6.2 B’s (or V’s) obligation to prepare site

6.1 Preparation & delivery of site prep specs

6.0 ID of general contractor; roles and resp; liens; overall schedule

6. SITE PREPARATION (D)

11.8 Remedies for delays or inadequate docs

11.7 B’s rights to source code & related docs

11.5 B’s rights to reproduce & to future docs/enhancements

11.3 Relationship to proj timetable & performance measures

11.1 Desc of doc types; Docs stds: user, test, system docs

11. DOCUMENTATION (D)

10.13 Remedies for delays in provid suitable train

10.12 Continuing Avail of on-site training by V

10.11 Continuing Avail of std V classes

10.10 B’s rights to reproduce & use training matls

10.9 Number of trainees

10.8 Avail of instructor’s matls & training

10.7 Avail of student matls

10.6 Relationship to proj costs

10.5 Relationship to timetable

10.4 Stds for acceptable performance

10.3 Location of training

10.2 Qualifications of trainers

10.1 V’s obligation to provide training

10. TRAINING (D)

© 2006-2009 by Warren S. Reid All Rights Reserved 32 s6 m


- reviews; walk-thrus; inspections

Static Tests - 15% incl:

recover-, bullet, and many more

- '-ability' (use', scal-, port-, maint-, reuse-,

- Independent V&V; Viral, Security; Acceptance; Beta

- new funct; regression; performance; capability;

- Interface, data audit, test of/w converted data

- white/black box; sub-routine; unit; integ, system

Dynamic tests - 85% incl:

14.3 All manner of tests for funct & '-abilities' incl:

Military; Operating Systems (latent error stats avail)

End-User; MIS; Outsourced; Commercial;

14.2 All Kinds of Systems:

14.1 Diagnostic tests of hw, infra, netware

14. LOW LEVEL, SYS’M & INTEGRAT TESTS (D)


14.9 Remedies for failure to meet test criteria

14.8 Relationship to performance measures

14.7 Maintenance service during testing

14.6 Escalat Process; SWAT - SW Adjudication Team

14.5 Desc of error severity levels/time to repair each- Test metrics to rept progress, issues and probs

- Rigor of error root cause id, est to fix, fix process

- Std test docs; signoff; rigor & format of error logs

- No. of shifts, def of scenarios; end-to-end tests

- Test results review: who, when, turnaround time

- Test: sched, training, environ, equip; access

- Experience test staff: leads, SMEs, analyst, testers, QA

- Test tools: decide, acquire, train; # test environs

- Def of accept results to move to next test level

- Goal, objectives, success criteria

14.4 For each test level consider no. of tests and:




15.10 Relationship to warranty & maint provisions

15.9 Remedies for failure to meet accept criteria

15.8 Definition of acceptance

15.7 Correction of errors & problems

15.6 Review of test results

15.5 Period of testing

15.4 Relationship to functional rqmts & perform stds

15.3 Desc of test procedures & criteria

15.2 Desc of test data & responsibility for prep

15.1 Live or simulated environ; w new BPR

15. ACCEPTANCE TESTING (D)


(E) Customize and ConvertCustomize and Convert

8.15 Relat’shp to termination rights

8.14 Remedies for delays in completion

8.13 Relationship to project timetable

8.12 V’s obligat to deliv source code & related docs

8.11 V’s resp for acceptable unit/sys test procs

8.10 X-ref to system & acceptance test provisions

8.9 Specification of change order procedures

8.8 X-ref to system, program, & user docs stds

8.7 Specification of programming stds

8.6 Review/approval by B of detailed design specs

8.5 Development by V of detailed design specs

8.4 Relat’shp to proj timetable

8.3 Relat’shp to stipulated performance measures

8.2 V’s obligation to develop custom apps

8.1 Incorp of functional processing rqmts docs

8. CUSTOM PROGRAMMING SERVICES (E)

9.13 Pre-installation machine time

9.12 Assist to B in develop'g disaster recovery plan

9.11 Assist to B in developing security plan

9.10 Assist to B with backup arrangements

9.9 Assist to B with development of backup plans

9.8 responsibility for trouble-shooting

9.7 Coordination of telecom procurement

9.6 Assist to B in locating & screening employees

9.5 Assist to B in acquiring other products/services

9.4 Assist to B with site acquisition &/or prep

9.3 Development of test data

9.2 Application program conversion

9.1 Data conversion

9. CONVERSION & OTHER SUPPT SERVICES (E)


(F) PersonnelPersonnel

13.8 Ability to pass on V's staff salary raises to B

13.7 Prohibition against removal or reassignment

13.6 Right to request replacements

13.5 Temporary replacements for sickness, etc.

13.4 Prohibitions against interruptions in Availability

13.3 Periods of Availability

13.2 Application certified/certificates; Updated CMMi rating

13.1 V’s staff qualifications/B’s approval/denial rights; Staffs’ evals; courses taken; experience &

expertise


(G) Post GoPost Go--Live ServicesLive Services

16.12 Relat’shp to disclaimers & Limits of V’s liabs

16.11 Assignability of warranties

16.10 Remedies for failure to meet warranty obligs

16.9 Scope of warranty obligations

16.8 Relat’shp to maintenance provisions

16.7 Start date(s)/length of warranty period(s)

16.6 Relat’shp to performance measures

16.5 Pass through of third party warranties

16.4 Service warranties

16.3 Software warranties

16.2 Hardware warranties

16.1 V’s financial condition

16. WARRANTIES (G)


(G) Post GoPost Go--Live ServicesLive Services

17.13 Replacement of “lemons”

17.12 Uptime guarantees

17.11 Maximum repair time

17.10 Escal of maint suppt if delays to correct probs

17.9 Required dispatch or respond time(s)

17.8 Classific of types & criticality of maint probs

17.7 Notice of defects or problems

17.6 Types & Desc of maintenance support

17.5 Relat’shp to performance measures

17.4 B’s renewal rights for guaranteed period

17.3 Required notice for termination

17.2 V’s termination rights

17.1 Start date(s) & length of maint period(s)

17. MAINTENANCE (G)

17.26 B’s rights to assign maintenance rights

17.25 B’s rights to future enhancements

17.24 B/U equip avail during extended maint periods

17.23 Limits on increases in maintenance fees

17.22 B’s right to get maint o/s principal maint period

17.21 V’s obligation to coordinate third party maint

17.20 Remedies for delays in providing adeq maint

17.19 Limits on B’s rights to perform maintenance

17.18 B’s rights to maintenance training

17.17 B’s rights to maintenance manuals

17.16 B’s rights to perform maintenance

17.15 Limits on Vs refurbishment rights

17.14 Avail of spare parts or components


(H) SPECIAL OUTSOURCING CONSIDERATIONSSPECIAL OUTSOURCING CONSIDERATIONS

33. 1o No full com plan in effect, incl escal, reg sch meets,

33. 1n Not resolv'g ops issues b4 move to K legal aspects

33. 1m Insuff knowledge of OS capacity limits

33. 1l Not doing biz/financial due diligence on OS candid

33. 1k Using poorly devel/documented serv/prod spec

33. 1j Not using variety of perspectives in selection process

33. 1i OS in international market w/o int. ops experience

33. 1h Define Success (iterative, incremental, interactive)

33 .1g Must have both orgs' staff on both sites; Build trust

33. 1f Security/privacy laws; cyber crime; terrorism

too many polit parties; Turnover by “Group/Floor”

33. 1e Time Zone diff; Infrastructure poor; 22 official langs;

33. 1d 'Please You; Don’t Ask?'; 90% of time w/say "OK"

In fact, most report 1st year savings of 0%

33. 1c Think w/cost 70-80% less but only profit 20-30%.

33. 1b SOX/Regs adherance; No subbing to China

33. 1a “59% of all O/S Ks fail” (Compass '05; Forrester '07)

33.1 BIZ CONSIDERATIONS & RISKS (H):


(H) SPECIAL OUTSOURCING CONSIDERATIONSSPECIAL OUTSOURCING CONSIDERATIONS

33.17 K provisions to limit use of subs (e.g., to China)

33.16 K provisions to secure approp supplier talent:

33.15 Keep staff knowl: apps, biz, tech, procs to mg OS

33.14 Diff for single silo OS than for “big bang” tranx

33.13 Min retention per for transitioned/L Term crit Ees

33.12 Term, terminat assist services, rights to terminat

33.11 Ownership of custom devel & other work product

33.10 Financial terms

33.9 Commitments regarding supplier personnel

33.8 SLAs: how they wk, credits, contin impr oblig, chg

33.7 O/S obligs to keep pace/refresh w tech advances

33.6 Control of arch, tech, and org change stds

33.5 Right to use 3rd party OS to in-source/re-source

33.4 Proc to begin/request new service, changes, projs

33.3 Train both Cust & OS mgmt & operations on O/S K

33.2 CONTRACT ("K") CONSIDERATIONS (H):© 2007 Michele Kane & Wendy Gross All rights

reserved

33.25 Counsel’s role does not end when deal signed!

33.24 Terminat'n assist: doc plan; staff; all equip, sw, matl, data, 3rd pty Ks/ tools to prov serv; train C/ 3rd pty in equip, sw, tools; Right to employ OS staff; Right to pur equip/assume leases

33.23 Service level improv (esp if SLAs met but servunsatis

33.22 K cost reduct'n commits, process improv; Stdsimplem

33.21 Coop Oblig: betw OS/C/3rd parties; staff; facilities, equip, sw, doc, biz process access; Adding new OSs;

33.20 K s/req OS to track (at min): asset type/location, ID, ser/model #s, in serv date; sw/hw vers/upgrades; if own, lease, license & fin resp party; Apps tied to server; Changes

33.19 Baseline OS resources for ongoing suppt/projects to allow B to reprioritize services and reassign OS resources

33.18 Limit unnecess charges: data recovery; serv re-perform

33.3 Change process: biz, staff, tech, ind stds, laws, regs& efficiency gains. Limit OS abil to charge for such changes


Some Important Legal Clauses/Thoughts In Virtually ALL Contracts ((IT and OtherwiseIT and Otherwise))

Assumptions and GoalsDo You Really Want to Avoid Litigation?Attorneys’ FeesDon’t Do A Contract UntilYou Know What Is Being Delivered VenueChoice of LawUnder the Subject MatterIndemnificationAlternative Dispute ResolutionArbitration

© 2006-2009 by Warren S. Reid All Rights Reserved 41 s2 m

Assumptions and GoalsAssumptions and GoalsAssumptions and Goals

These tips apply to contracts where 2 sides might have different business goals

Even real “partners” don’t always agreeNOTHING like a mutual profit to make people forget they don’t like each other

No contract is so large, or so small, that you can’t have a disputeThere are good choices that can be made Do You Really Want to Avoid Do You Really Want to Avoid

Litigation?Litigation?Litigation is getting into court, or staying out of court, whichever is better for you in the particular situation.

You may not want to be in court, but that doesn’t mean you want to tell other side about your preferences


AttorneysAttorneys’’ Fees ClauseFees ClauseNotice the location of the apostropheAre you more likely to be paying or collecting feesExperts witnesses & costs are *not* attorney’s feesVery important to say “reasonable”fees or “all” fees (maybe)Scope of the clause

Only for collection of monies dueMutuality may be presumed by law

DonDon’’t Do A Contract Untilt Do A Contract UntilYou Know What Is Being You Know What Is Being DeliveredDeliveredNO substitution for specifications!!If business people understand what they are getting (or giving) then:

Better chance they won’t ask about litigationThey should be able to explain it

If not, be sure they don’t complain about the fact that a jury will be deciding for them – years later!

Some Important Legal ClausesSome Important Legal Clauses


More Important Legal ClausesMore Important Legal ClausesVenue ClauseVenue Clause

An idea to minimize litigation,and avoid dispute over two different locations

“If you sue me, it must be in my location. If I sue you, it must be in your location.”

Before you insist on location,make sure you’llbe there in 5 yrs

Choice of Law ClauseChoice of Law ClauseFew cases are resolved based on which choice of law is usedIt is difficult for counsel to agree to a body of law which they don’t know


More Important Legal ClausesMore Important Legal Clauses

Understand the Subject Understand the Subject Matter Matter You must understand the subject matter in order to include appropriate remedies and protectionsWe’re in court because attorneys try to fake this all the timeIt’s why you need an IT Contracting Team

IndemnificationIndemnification ClauseClause“Indemnification” is a Misnomer –Correct Term is: “Invitation to Litigation”Indemnification just about never works


More Important Legal ClausesMore Important Legal ClausesADR

The term is a misnomer – Mediation and Arbitration should not be referred to in the same paragraphThe only time when mediation is a bad idea is when the subject matterisn’t worth talking about (which means: “not worth litigating”)

Arbitration ClausesMake sure that your client understands that the arbitrator is not required to follow the lawIf you want the right to appeal, you need to set a mechanism outside of the courtsLimitations on discovery may, or may not, be to your advantageEstablish arbitrator(s) quals


1. Scratched underside of the Iceberg2. Both sides Lose in Litigation: See it from both sides3. Contracts allocate risk: Get it in writing Up front4. Negotiate for “Intention”: NOT “Principle!”5. Here are our needs! U devel clauses! We select best!6. Be Flexible: everything not = in import or linear7. If you want to end w Success, start w Success8. You NOW know the risks! Manage them!9. Perform OUTSTANDING Reference Checks 10. Follow good methodologies11. Measure: Quantity & quality, Progress & Status12. No Panaceas: Consider SWAT, Mediation, ADR

47© 2006-2009 Warren S. Reid All Rights Reserved

47 w10 m

AFTER YEARS OF EXPERIENCE:AFTER YEARS OF EXPERIENCE:THE GOLDEN ANSWER!THE GOLDEN ANSWER!

d(y)d(y)hh : : f(y)f(y)pp ++ (l)(l)++

(c)(c) == PP22RR© 2006-2009 Warren S. Reid All Rights Reserved

48 w2 m

WSR CONSULTING GROUP, LLCManagement, Technology, e-Business &

Litigation ConsultingWarren S. Reid, Managing DirectorPH: 818/986-8832 E-mail: [email protected]: www.wsrcg.com

More related materials can be found at: http://www.wsrcg.com

© 2006-2009 by Warren S. Reid All Rights Reserved 49 s

Closing Comments, Thoughts & QuestionsClosing Comments, Thoughts & Questions

By Steve Brower, EsquireBuchalter Nemer PLC, ShareholderE-mail: [email protected]: www.buchalter.comOffice: 714/549-5150

4 m

Additional Resource MaterialsIntroducing “The Four IT Success Models”:


For full size views of the “IT Success Models” go to:•• http://www.wsrcg.com/PDFs/model_riskipedia.pdf• http://www.wsrcg.com/PDFs/model_requirements.pdf• http://www.wsrcg.com/PDFs/model_itcontracting.pdf• http://www.wsrcg.com/PDFs/model_cpritprojturn.pdf

II. REQUIREMENTS model

I. RISKIPEDIA 2.0 model.

Business Players

• CEO, CXO• CFO, CIO• Tech Steer Comm

Technology Players• Software Arch.• Systems Eng.• Project Manager

Legal Players• In-House Counsel• Special Counsel• Litigation Counsel

WSR Consulting Group, LLCIT Experts & Expert Witnesses

Our Four IT Success Models address today’s most confounding IT challenges: Risk, Requirements, Law,

& Project Recovery.

III. III. CONTRACTS modelCONTRACTS model

IV. CPR model“Cooperative Project Recovery”

Directory to WSR Consulting Group’s “Four IT Success Models”© Copyright 2008 Warren S. Reid All rights reserved

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Documents

& What YOU Can Do About It! · 8/6/2009 · Steven Brower , Esquire ´Litigation shareholder with Buchalter Nemer ([email protected]) in Orange County, California ´30 years