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A Guide to IT Contracting by Michael R. Overly, Matthew A. Karlyn

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xxiii
Preface
INTRODUCTION
Information technology (IT) is critical to the operation of every business.
IT drives enterprise eciency by breaking down communication barriers
both internally among employees, management, and directors, and exter-
nally between the business and its customers, advisors, and other con-
tributors. Unfortunately, in our cumulative decades of practice in the area
of information technology and outsourcing law we have found that many
businesses fail to identify and adequately address the issues that arise in
their IT contracts. Together, we have reviewed, draed, and negotiated
thousands of IT contracts for practically every type of product, soware,
hardware and service. Time and time again, we have found businesses fail
to address the essential elements of their contracts and, ultimately, fail
to adequately protect their organizations, placing their assets and data
at risk. is can expose the company to unnecessary liability and lead
to uncontrolled costs. e net result? Companies assume far greater risk
and liability associated with these transactions, and end up spending too
much time and money on these transactions, than is necessary.
Even the most sophisticated businesses with the most sophisticated
IT infrastructure and an army of lawyers in their in-house legal depart-
ments are frequently unfamiliar with all the key issues that may arise in
contracting of this kind and are, therefore, not equipped with the tools
or knowledge to make informed and strategic decisions when review-
ing, draing, and negotiating these contracts. What’s worse, companies
are accustomed to using outside corporate lawyers who might be highly
skilled transactional and securities lawyers, but who arent familiar with
the nuances of IT or how to properly structure an IT deal to protect the
client and its assets.
Information technology is likely not your company’s core competency
or your company’s focus. Nonetheless, it likely drives your business.
Your board may cringe when the CIO asks for millions of dollars’ worth
xxiv  •  Preface
of upgrades to IT infrastructure or approval for that next big soware
or outsourcing project. IT spending might not be your company’s larg-
est expense, but it is probably among the top two or three. While your
company may not focus on IT and might constantly question the millions
of dollars’ worth of equipment, soware, and professional services that
comprise your IT infrastructure, it’s a sure bet that the company wouldn’t
survive long without it. ink about what your day would be like today if
your e-mail system was down for even an hour or two, let alone several
days. What would happen if your website suddenly crashed and the com-
pany could no longer take orders? How much would productivity suer if
your document management system was suddenly inaccessible, or if the
data stored in the system disappeared? What would the reaction be if your
payroll system went down and people didn’t get paid? How much lost pro-
ductivity would result if your customer relationship management (CRM)
system crashed and your sales force couldn’t access information it needed
to contact clients and sell products? What would the result be if your com-
pany’s data security system failed and customer and employee data was
suddenly accessible outside of the company?
When IT fails, businesses may lose revenue, suer harm to their reputa-
tion, compromise the security of and lose data, face regulatory sanctions
and liability, lose competitive advantage, and be exposed to lawsuits from
their business partners, customers, investors, employees, and sharehold-
ers. Failure of IT can literally mean that the “lights go out” for a business.
e fact that IT is a (if not the) most critical component of your company,
without which your company may suer considerable harm, is the reason
we wrote this book.
is book is designed as a Rosetta Stone of sorts for IT contracting.
It presents a distillation of the most critical business and legal lessons
learned from decades of draing and negotiating virtually every type of
IT-related agreement. In a single volume, you can quickly access infor-
mation on almost every type of technology agreement and immediately
understand what the agreement is intended to do, the critical business and
legal issues that must be addressed, tips and best practices for negotiation
of key terms of the agreement, and the most common pitfalls typically
encountered. e information is presented in a highly accessible hand-
book form, intended to provide you with immediate tools to more intelli-
gently address issues in technology contracting and how to negotiate those
types of agreements.

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