Upgrading a large complex portion of a company’s (“Newco’s”) IT infrastructure can be a daunting task. However, as its business grows, Newco will want and need to add new capabilities and enhance existing service offerings. Here is a brief overview of some strategies for helping Newco navigate the process including software and hardware procurement, finding the right systems integrator, negotiating Service Level Agreements (“SLAs”), and ensuring timely on-budget implementation.
Software and Hardware Procurement
Newco will want to work closely with the Systems Integrator (“SI”) during the procurement process in order to lay the foundation for successful negotiation of the various vendor agreements and implementation. It will give Newco insight into the players, products, and scope of the upgrade, and put Newco in a position to apply and integrate specific data points into its agreements. Newco wants to ensure that its procurement experts are not just seeking the newest software and hardware on the market, but rather specific solutions that meet Newco’s needs and helps Newco meet its primary goals and objectives. Otherwise, contract negotiations will be less valuable.
When counseling Newco on software and hardware procurement, I focus on understanding the scope and requirements for the new IT network, ensuring protection of the data residing on the existing IT infrastructure, structuring transactions that facilitate seamless transition to the new IT systems, and creating legal obligations that require vendors and consultants to carefully manage IT assets and provide support services that comport with the highest industry standards. Procurement is a complex process with lots of moving parts, and Newco must work diligently to ensure that it is involved early and often so that the contracts effectively outline procurement objectives in detail, create accountability, define remedies, and establish a clear set of deliverables from service providers, vendors and consultants.
Systems Integrator Services
As with procurement, Newco will also want to be involved in the process of evaluating and choosing the SI. The SI will be responsible for orchestrating and implementing all of the various hardware, software, networking and storage products Newco chooses during procurement from multiple vendors. Newco will want to see a specific integration plan from the SI and integrate that plan into the SI engagement agreements. Will Newco need to design and build a customized architecture? Will Newco need to integrate new with existing hardware infrastructure? Will Newco be purchasing pre-packaged or customized software? These are all questions that need to be addressed before agreements are signed.
The key to a successful SI engagement is (1) ensuring that the SI is legally obligated and contractually bound to optimize the lengthy and complex procurement, implementation, and integration process; (2) outlining the SI’s responsibilities for administering, overseeing and supervising the IT service providers; (3) measuring SI’s performance against well-defined criteria; and (4) obligating SI to actively and effectively communicate with, and facilitate communication by and among, Newco and the various software and hardware vendors, suppliers, contractors, and consultants. Moreover, the SI’s pitch to Newco needs to match its process as provided for in the SI Managed Services Agreement.
How does the SI’s process ensure quality control over implementation, software and hardware testing and acceptance; strict adherence to vendor and consultant representations and warranties; facilitate workflows; and achieve milestones outlined and defined in the various agreements with vendors and consultants? Does the SI have its own systems integration software including a shared dashboard with Newco that enables simultaneous viewing and tracking of deliverables? Ultimately, Newco must develop an intimate understanding of the SI’s toolkit in order to lay the foundation for successful contract negotiations with the SI.
Service Level Agreements
The SLAs should include not only a description of the services to be provided and their expected service levels, but also metrics by which the services are measured, the duties and responsibilities of the vendors and consultants, the remedies or penalties for breach, and a protocol for adding, removing and modifying metrics as the procurement and implementation process unfolds. SLAs should outline the specific services to be provided, what, if anything will be excluded, conditions of service availability, standards such as time window for each level of, responsibilities of each party, escalation procedures, and cost/service trade-offs.
SLAs should also include measurement standards and methods, reporting processes, contents and frequency, a dispute resolution process, and an indemnification clause protecting Newco from third-party litigation resulting from service level breaches. Newco will want to draft carve-outs for limited liability provisions in the SLAs related to indemnification obligations, breaches of confidentiality, gross negligence, and intentional misconduct. At their core, SLAs should be a reflection of Newco’s technical goals (i.e. availability levels, throughput, jitter, delay, response time, scalability requirements, new feature introductions, new application introductions, security, manageability, etc.), and any constraints or limitations on such goals. The SI will need to prepare software application profiles in order to help define the corresponding scope of the IT network’s service level requirements.
Ultimately, the hardware and IT infrastructure need to support all software application requirements without suffering a downgrade in any network services. The SLAs must articulate the convergence and interplay between Newco’s business requirements, the proposed software application profile, and corresponding IT network requirements such as bandwidth, delay, and jitter. In addition, it is crucial that the SI, vendors and consultants all understand the potential impact on Newco and its customers of any network downtime. Availability and performance standards (i.e. round-trip delay, jitter, maximum throughput, bandwidth commitments, overall scalability, etc.) in the SLAs will create the legal thresholds for the service expectations of Newco. Moreover, service level definitions in the SLA are worthless unless Newco is able to collect metrics and monitor compliance.
Linking Payment Terms to Deliverables
In the various Statements of Work attached to the Services Agreements, whether fixed fees or time and materials, Newco will want clearly defined deliverables with corresponding milestones, an acceptance process for each deliverable, and payment terms tied to the acceptance of those deliverables. A Change Order process is also helpful in avoiding “scope creep” and forcing service providers to stay on budget.
Specific Language To Hold SI And Contractors Accountable For Project Schedule And Budget
Newco’s agreements with SI and contractors must always have timelines for deliverables, definitions of scope of supply of services and products tied to a specific cost structure, and requirements for active and ongoing communication about status.
Allowable Uses For Contingencies
The various risk factors that cannot otherwise be accounted for in a clearly defined statement of work and corresponding fee structure should be clearly outlined in the applicable agreements. Unpredictable costs should be de minimus if Newco has chosen the right products and team to implement them. Material and reasonably unpredictable scope of work errors and miscalculations and unforeseeable implementation issues should be the triggers for use of contingencies. Costs associated with a vendor’s estimating inaccuracies and “scope creep” due to underbidding should not trigger release of any contingency set-asides. The contingency clause should also describe the process by which contingency funds may be accessed, and the paperwork and approvals needed to use contingency funds.
Privacy
Finally, Newco must incorporate information security and privacy protections into every aspect of the IT infrastructure upgrade. This is especially important in light of the evolving body of consumer-oriented privacy laws and regulations governing outsourcing transactions including, but not limited to, the California Consumer Privacy and Protection Act of 2018.
- Partner
Jeffrey R. Glassman is Partner and Chair of the Intellectual Property and Technology Law Department and has earned the esteemed designation of Certified Information Privacy Professional (CIPP/US).
Jeffrey has spent the last two ...
Subscribe
Recent Posts
- Entertainment Vendors Must Certify Safety Training for Employees By: Jared W. Slater
- California Employers Prohibited from Mandatory Religious or Political Meetings | By: Jared W. Slater
- California Expands Reach Of Crown Act to Prevent Discrimination Based On Natural and Protective Hairstyles | By: Cate A. Veeneman
- SB 1340 Allows Enforcement Of Local Employment Discrimination Laws | By: Kelly O. Scott
- Landlord: Look Out and Take Notice | By: Geoffrey M. Gold
- New Cal/OSHA Indoor Heat Standards Require New Prevention Measures and Written Prevention Plan | By: Joanne Warriner
- California Bans All Plastic Bags at Grocery Stores | By: Pooja S. Nair
- FTC’s Nationwide Ban on Non-Compete Agreements Stopped by Federal Court Ruling | By: Cate A. Veeneman
- Can the IRS Obtain a Receiver to Help Collect Taxes Owed? | By: Peter Davidson
- Severing Unconscionable Terms in Employment Arbitration Agreements | By: Jared W. Slater
Blogs
Contributors
Archives
- December 2024
- November 2024
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- March 2019
- February 2019
- January 2019
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014