DETROIT – You fought for, and then won, an approved budget for a new software system. You were delegated the task of organizing, collaborating, and then issuing the request for quote for a new enterprise wide system for your company. The vendor selection was completed, and the contracts are signed.
Six months after the software implementation, your email inbox is overflowing with requests for your signature on costly modification specifications for the new system. You immediately call meetings with your applications support staff to understand why these modifications are needed when this vendor received the highest scores during the vendor review process.
You learn that one department has complained that in order to achieve the functionality they had on the old legacy system, they are required to enter duplicative data on three additional screens, which has decreased productivity in their department by over 30 percent. Another department is manually re-entering all of last year?s data because the vendor?s conversion effort had to be abandoned due to the high number of errors.
Further, after reviewing the specifications detail for the modifications, it appears that some of these modifications are actually bug fixes for the baseline software that you purchased! And finally, the collective vendor quote for these modifications, if you were to proceed with the work, would exceed 50 percent of the license fees paid to the vendor for the software.
Your CEO will not be pleased to learn about any new impact to this year?s (or even next years) budget, and worse, the CEO may start to question how you ran the vendor selection process. What is the best next step?
First, find the signed contract with the vendor. Read it once, and then read it again.
Was your Request for Quote incorporated into your contract? Did the vendor provide responses to your functionality questions that the vendor has now reneged on? Is there a discrepancy between their original representations and the actual performance your company is experiencing? What does the contract state about warranties and guarantees of performance? Has the vendor repeatedly missed delivery deadlines? Does each installation or ?upgrade? from the vendor cause new headaches for formerly functioning software modules?
A legal analysis that reconciles the answers to these questions with the vendor?s legal obligations will assist you with creating a reasoned approach for initiating a dialogue with the vendor. If the lack of performance is significant, you may want your attorney to initiate the dialogue.
A thoughtful consideration should be made as to how to scale the message to the vendor: is the objective to outline a ?cure? for the software delivery, and provide the vendor with expected delivery dates and required acceptance criteria; or, after review of the state of affairs, is the objective to prepare for termination of services altogether. One objective may result in a formal amendment to the contract, and the other, upon unsuccessful negotiation, could lead to litigation. In either case, have counsel participate early in the process. A legal analysis and review of your situation will best support your ultimate decision and strategy with the vendor.
Carol Romej is a shareholder at Butzel Long and co-chairs the Technology Practice Group and the E-Discovery Practice Group. Ms. Romej has extensive experience in data forensics, e-discovery protocols, data breach investigations, and complex technology agreements and related litigation. Ms. Romej previously served as an adjunct professor of Information Assurance in the graduate program at Walsh College and the Computer Security program at Washtenaw County Community College. Email: [email protected]
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