The goal of drafting and negotiating your ERP contract should be to drive all parties to deliver implementation success. While coming to mutual agreement on terms and conditions that mitigate risks and maximize success is the end goal, the way you get there as a licensee is fundamentally different than the ERP vendor’s approach. These different approaches result in conflicting negotiating strategies.

As a customer, you want to ensure that you are able to leverage the ERP contract to manage the ERP vendor relationship not only for the duration of the implementation project, but for the lifecycle of the software product you are licensing from the vendor.

Clearly stated obligations and definitions are critical. Statements of work that incorporate change orders, carefully drafted acceptance testing criteria, detailed deliverables and milestones are essential. You should view your contract (along with an incorporated project plan) as a road map for how the implementation will be conducted.

With respect to the software license, you want to maximize the flexibility with which you can use the software. Maintaining flexibility minimizes the cost of the software over the term of the license and minimizes the risk of inadvertently breaching the contract. In contrast, the ERP vendor’s goal is to provide the most limited right to use the software for a limited period of time so as to maximize revenue.

To help you protect your business, Taft is providing the following guide free of charge: Software Negotiation Checklist. Please fill out the information below and we will send the documents directly to your inbox.

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