Naivete hampers computer contracts

Lack of common understanding of underlying business issues is one of the main cases of failure in computer contracts. With that in mind, the Information Technology Association (ITANZ) has launched a series of guidelines for computer contracts. The booklets cover software licensing, system maintenance and facilities management contracts.

Lack of common understanding of underlying business issues is one of the main cases of failure in computer contracts.

The Information Technology Association (ITANZ) has launched a series of guidelines for computer contracts. The booklets cover software licensing, system maintenance and facilities management contracts.

Speaking at the launch last week, lawyer Ross Johnston, who helped put the guidelines together, identified four common reasons for such failures.

These are:

• Lack of focus on key priorities.

• Conflicting perceptions — for example, technical versus business.

• Unrealistic time frames.

• Lack of negotiating ability on the part of those taking part.

“If such contracts are to be successful those taking part need to have a shared perception of the business objectives,” Johnston says.

Another common problem is an excessively adversarial position taken by one or more parties.

“Both sides often think they are getting a raw deal,” says Tony Bradley, managing director of NCR.

The guidelines are not model contracts, says Bradley, who also worked on them.

“We are not saying this is an industry standard. It’s not possible for us to do that. We are offering them as a guidelines.”

The growing complexity of computer contracts is highlighted by IBM New Zealand managing director Gowan Pickering, who says that a set of agreed principles as a basis for contracting is essential if the parties wish to avoid a lot of grief later on.

One of the smoothest contractual arrangements he experienced was when the customer began the process by handing over a two-page document outlining the principles on which they wished to work.

“The reality is that IT projects are a moving target — but at the same time they need to be on budget. As projects become more service-oriented there’s a need for an umbrella document setting out the aims, objectives and principles.”

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