Chapter 27 - Software Licensing and Maintenance Contracts

For successful drafting and negotiation of software licensing and maintenance contracts, the customer must determine:

• Why do we need this software?
• What is the business problem the software is intended to solve?

It is important to understand the agency's business problem that the software being purchased is intended to solve. For example, is the agency planning remote locations? Will existing licenses be adequate for any expansion? The more information the software buyer gathers, the more effectively the contract can be customized to protect the agency's and the Commonwealth's interests.

Read the license terms very carefully. Ensure that the contract provides for the following:

• What happens if the agency's needs or customer base should change/grow/shrink?
• What happens if the supplier changes/grows/shrinks/disappears?
• What if the technology changes?
• What if the project is delayed/changed/scrapped?
• What happens to agency's continuity of business if the supplier has the ability to auto-terminate the license?
• What if the license agreement does not allow for access to the software by agency's agents for conducting the business of the Commonwealth?
• What interruption of services or business happens to the agency if supplier requires random license audits? Who conducts the audits? Who pays for the audits? What are supplier's remedies if audit finds agency out of compliance?

Whatever the agency's business objective in buying the software, it is advantageous to build flexibility into the software licensing and/or maintenance contract to insure that the licenses can adapt to changes in a fast moving technical environment.