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It’s a typical conundrum, how do you do your best to keep software implementations on-time?
I was asked this the other week and (as you do) drifted into a long and varied discussion into ‘service credits’, other penalties and contract conditions. While I am not a massive advocate of reaching for your application software contract, every five minutes. However, it should be somewhere close to hand and able to be ‘playfully waved about’ when needed.
The purpose of the contract is of course to protect both parties, if executed properly. In that sense, its best partly a compromise by both. Specific penalties are useful, although they are no guarantee or pot of gold if things go wrong.
For example, I have seen clients get them selves in knots coming up with elaborate service credits, but in the big scheme of things, these often amount to maybe only a few hundred pounds in a particularly performing month. Raising a credit for under a grand is no biggie to most suppliers, that’s unlikely to change habits anytime soon.
One off penalty payments hanging over delivery or implementation can be another misnomer. On one occasion I had a client clearly unhappy with their supplier, for a number of reasons, over a number of years. Routinely, they would insist on penalties of a few grand, to guard against long delays (of which they had experienced many). I was on site one morning of a project meeting with the supplier, their account manager and a manager from the software house at director level. The client correctly pointed out in a contract where there was a £9k penalty. The project was nearly 18 months late.
Depressingly the (well known) supplier director, analysed the small print and replied, “Yes – we will pay that”. He was then looking for some look of gratitude or a ‘Thank You Mate’ I guess. Of which he didn’t get one. Nor should he either as that 18 month overrun had perhaps caused four staff to need a new temporary workaround and having lost the opportunity for some serious transformation. The £9k was barely touching the sides.
Personally, my favourite clause in contracts based on overruns is getting senior software people of director level in the meeting with you each month. Then they might see for themselves the unpleasant SMT style meeting prior to the project one, where ICT and the project manager get ritually flogged. Directors of software houses getting a taste of that pain themselves can be really helpful. Spookily enough after having their ar*e dragged in to those for a few months, that can be much more effective than raising a few credit notes.
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Related Post: Any idea even where your software contract is?
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(c) Tony Smith, Acutance Consulting www.acutanceconsulting.co.uk 07854-655009
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