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02 December 2019
austria vienna

Golden Rules for IT Procurement

Procuring IT systems is an increasingly complex and important task. Virtually all companies nowadays depend on their IT systems. It goes without saying that their procurement should be well planned. Skilled IT lawyers can support in this task, provide valuable input and guidance, take over responsibility for the legal aspects and enable the procurement departments to focus on their core tasks. Having spent years supporting procurement departments in numerous IT procurement projects, I have put together a short and easy to follow list of "golden rules". Keeping these rules in mind will certainly have a positive impact on the procurement process.

# 1: If you are spending more than EUR 50,000 on software (licence fees, external and internal costs for the implementation project, etc.) or if the product relates to a business critical system or process or if you do not completely understand what you are buying, have your (qualified) lawyer take a short look. They will tell you if it's worth reviewing the matter in more detail.

# 2: From the lawyer's perspective: Reviewing a contract without knowing and understanding what the project/product is about does not make any sense. Even if the client is in a hurry. From the client's perspective: If you want to test your attorney, find out if they insist on being informed about the project and your goals before reviewing the paperwork.

# 3: Certain characteristics of the provision of services can be structured very differently from a legal point of view. This can have a big influence on the price. Before obtaining the first offer, the client should already clarify whether they want to inform the provider of their requirements or whether they consciously wish to withhold this information. The client's decision in this regard can significantly influence the price negotiations. The client should therefore make a well-informed decision.

# 4:  When negotiating the contract for an IT project, the project manager absolutely must be actively involved in the negotiations. In large companies, there is sometimes a tendency to leave contract negotiations to the legal department and the purchasing department. This is a huge mistake. The project team must be part of the negotiations.

#5: When drafting contracts, it is not so important whether the client's or the supplier's sample contracts are used as a starting point. It is much more relevant that the contract is adapted to the specific project and, in addition to the legal requirements, also takes into account the economic, technical and organisational requirements of the project. The "best" contract is worthless if it does not take into account the special aspects of the specific project and if the agreed processes cannot be adhered to in practice. It is the lawyer's task to ensure this and to meaningfully consider the requirements of both parties in the contract. It will quickly become apparent whether the lawyer really has experience in comparable projects.