10 • A Guide to IT Contracting: Checklists, Tools, and Techniques
While every soware license agreement does not warrant a customized
approach, it is important that soware license agreements contain the
essential terms that address relevant business issues. It is oen the case
that soware licensing transactions are driven by a vendor’s soware
license agreement. Understanding that, in many cases, it makes sense to
start with a vendor form of license agreement, this chapter discusses the
language that your company should expect to see in its soware license
agreements. Short vendor forms are used by vendors in transactions that
range from the simple to the complex and may require a small nancial
commitment or several million dollars. When reviewing, draing, and
negotiating soware license agreements, it is essential that your company
understand each provision of the vendor agreement, how it operate, what
changes should be made to ensure that the provisions meet your compa-
ny’s business requirements, and what additional provisions your company
should propose adding to the soware license agreement so that the result
is an agreement that is balanced and meets your company’s needs.
FOUR CRITICAL QUESTIONS
Before draing or reviewing any soware license agreement, your com-
pany should ask four critical questions. e answers to these questions will,
in large part, dictate the type of provisions that you dra and the depth of
revisions that you will propose to the vendor’s form of license agreement.
• Business Purpose and Goals. What is the business reason for licens-
ing this application? is should include a fairly robust discussion
that the business has for implementing the application.
• Criticality. How critical is the licensed application to the organiza-
tion? By asking this question, your company is determining whether
the application supports a critical business function or a minor busi-
ness function. Your company should ask itself—what are the impli-
cations to the business if the application doesn’t work?
• Fees and Costs. What is your company going to pay for the applica-
tion—including with respect to the initial license, support, imple-
mentation fees, professional services fees, maintenance, etc.