The most important document related to your ERP implementation, integration, or digital transformation is the statement of work. Including milestones, deliverable specifications, and acceptance testing criteria are all critical to getting your implementation or digital transformation off on the right foot. Learn more from Taft partner Marcus Harris in this video:

The Most Important Document You Will Negotiate in Your Digital Transformation – YouTube

Oracle recently made its largest acquisition ever by closing a $28 billion deal for electronic health care data company, Cerner. Cerner is a cloud-based platform targeted around Veteran Affair’s patient safety concerns. Oracle’s acquisition of Cerner is a strategic move by Oracle to expand into the healthcare industry. By acquiring a healthcare company, Oracle aims to increase its presence in the healthcare market, potentially allowing health care providers to easily access and share electronic records while giving Oracle a strong foothold into a rapidly-expanding market segment.

Healthcare continues to be the nation’s largest employer, especially after the COVID-19 pandemic. Healthcare dominates in the domestic economy, and the cloud continues to dominate the tech industry. By incorporating the presence of healthcare into the cloud, Oracle has the opportunity to provide easy access to patient’s electronic records across various healthcare organizations.

When announcing the deal, Oracle cited a Mayo Clinic study finding that doctors would spend hours reviewing documents and medical records for every patient, increasing working hours and the probability of medical professional burnout. With the existing vast amount of data, clinicians struggle to get a 360-degree view of a patient’s care history prior to treating them.

According to Oracle, the deal would decrease healthcare spending and would introduce a new standard of data-driven healthcare.  It would increase productivity, while allowing doctors to treat patients in a timely manner. Oracle’s goal is to deliver “zero unplanned downtime in the medical environment and to capture opportunities to expand cloud, AI and machine learning applications for Cerner’s healthcare clients.”

But what would this mean for current Cerner customers and what are the practical implications?

  • Data security is a concern: The recent Kronos attack has many questioning the security of cloud migrations. Especially with the sensitivity and privacy of healthcare data, customers might find hesitation in the amount of security Oracle can provide.
  • Oracle will push Cerner customers to switch to “Oracle paper:” As with any acquisition, we expect Oracle to push hard to get Cerner customers to sign standard Oracle contracts.
  • Move To Oracle cloud: We also expect that Oracle will aggressively push Cerner customers to the Oracle cloud in a bid to compete with AWS, Azure and other cloud providers.
  • Audit used to generate revenue: Just as concerning are Oracle’s notoriously aggressive tactics in generating revenue from software audits. While Oracle touts its ability to transform the way healthcare data is acquired, shared, and monitored, Oracle’s push into the healthcare industry is about revenue.  We fully expect Oracle to squeeze Cerner customers for additional review by conducting aggressive software audits. These audits are typically not about compliance at all, but about a salesperson’s needs to meet a quota.

If you are a Cerner customer dealing with aggressive audit tactics or threats of noncompliance, it will be critical to develop a strategy to protect yourself from incurring unnecessary costs.

SaaS agreements are often difficult to negotiate and the terms and conditions can be counterintuitive. In this video, Taft Chicago partner Marcus Harris breaks down some of the most important issues you need to focus on when negotiating a SaaS agreement.

Three Things You Must Focus On When Negotiating A SaaS Agreement

Taft was a sponsor of the ITechLaw World Technology Law Conference, which took place at the end of May in San Francisco. In addition, Taft Chicago partner Daniel Saeedi presented “Face Scans, Fingerprints and Voice Recognition – The Current U.S. Regulatory Framework for Biometric Privacy.”

The International Technology Law Association (ITechLaw) has been serving the technology law community worldwide since 1971 and is one of the most widely established and largest associations of its kind. It has a global membership base representing six continents and spanning more than 60 countries.

Does an ERP vendor’s fiscal year matter in the discount you get as a customer? Absolutely. Oracle’s fiscal year ended in May, and Oracle’s salespeople are notorious for pressuring customers into signing deals with significant discounts prior to year-end under the notion that the discount will disappear after the year-end. Customers need to take into consideration the vendor’s year-end and its impact on the vendor’s willingness to provide discounts. However, only focusing on year-end discounts is misguided.

While it is true some discounts will no longer be available, it is unlikely that the vendor will walk away or that all discounts will disappear. While a salesperson may want to close a deal prior to the year-end, salespeople are under constant pressure to make their numbers. In our experience, the discount being offered as an incentive to sign by year-end will change, but it is unlikely to disappear entirely.

Moreover, buying around a vendor’s year-end is not the most effective strategy for securing meaningful discounts. Customers should be methodical and creative to properly motivate sales representatives to achieve the discounts and concessions the customer seeks while focusing on managing the cost of operating the ERP system over the lifecycle of the customer’s relationship with the vendor.

While focusing on upfront discounts, price caps, future options, and the ability to swap out functionality are all important, focusing on flexibility helps reduce the likelihood of a breach of the contract, reduces the likelihood of an audit, and reduces the cost to operate the ERP software over time. Instead of only focusing on upfront discounts, customers should focus on obtaining the greatest amount of flexibility in using the software. The goal should be to minimize unexpected fees and costs. A customer also needs to think about the cost of hardware required to use the software, the training needed to use the software, and any changes required to the customer’s infrastructure to use the software.

ERP vendors do not play fair. The discounts they offer are heavily tilted to favor the ERP vendor over time. The goal is to get you to sign, and then sell you as much software as possible. As a customer, it is important to assemble a negotiation team, focus on specific aspects of the deal, and negotiate the contract so that the contract is tailored to your business needs.

Understanding how to utilize a vendor’s year-end during negotiation can be a useful tool, but focusing only on upfront discounts is short-sighted. A focus on upfront discounts will most likely cost a customer more over the lifecycle of the software product vs. a focus on flexibility.

Drafting, reviewing, and negotiating software license agreements is challenging. In this video, Taft Chicago partner Marcus Harris breaks down three issues to focus on during any review or negotiation of a software license agreement

Three Issues to Focus on When Negotiating a Software License Agreement

Taft Chicago partner Marcus Harris will be one of the featured speakers during the 2022 Digital Stratosphere Conference Live Online Edition, Feb. 8-10, 2022. Harris will present, “Digital Transformation and Contracting” on Feb. 9 at 2:00 pm EST. This event offers insight from the industry’s leading experts for organizations embarking on a digital transformation.

For more information or to register, click here.

Taft Chicago partner Marcus Harris will be a featured panelist during iTechLaw’s 2021 World Technology Law Conference. Harris will speak on “Tips & Tricks for Successfully Negotiating Your ERP Contract,” an interactive session that will address key ERP contractual provisions, common vendor tactics, and strategies for negotiating a contract that increases the likelihood of implementation success.

The virtual conference is June 8-10, 2021. Harris will present on June 8 at 2 pm EDT. Click here to view the full agenda or to register.

iTechLaw has been serving the technology law community worldwide since 1971 and is one of the most widely established and largest associations of its kind. It has a global membership base representing six continents and spanning more than 60 countries. Its members and officials reflect a broad spectrum of expertise in the technology law field.

Harris has established one of the country’s leading practices devoted to drafting and negotiating Enterprise Software related license, implementation and SaaS agreements, as well as litigating failed software implementations in courts and before arbitration panels across the country. He is one of the foremost attorneys in the country representing government entities, distributors and manufacturers in recovering damages arising out of failed Enterprise Resource Planning (ERP) software implementations.

On April 1, 2021, the Supreme Court decided Facebook, Inc. v. Duguid, which narrowed the scope of the Telephone Consumer Protection Act of 1991 (TCPA). The Court unanimously ruled that Facebook did not violate the TCPA by sending unsolicited text messages to individuals without their consent, overturning the Ninth Circuit’s decision to broadly define automatic telephone dialing systems (“autodialers”) under the federal statute. The case boiled down to everyone’s favorite subject—grammar.

To read more, visit the Taft Privacy & Data Security Insights blog post.