The time and effort spent on software contract planning will provide benefits many
times over from the investment made into planning. The planning activity is designed to ensure that all
possible software contract benefits are identified and that a plan on how to deliver the outcomes from
those benefits can be achieved.
Software contract planning will
consider a number of important factors that are required for the management of the contract. These factors
include; scoping of the contract, the level of services required and what dependencies that are to be
provided by the organisation, how will the quality be monitored, measured and reported, what are the
critical service levels and what flexibility is there to change the service levels as business requirements
change. In addition what is the value to be derived from the contract, what mitigation strategies are to be
implemented to protect against value leakage, how can additional value be created from the contract, how
will the software vendor work with other software vendors for the delivery of business systems, how will
continuous improvement be undertaken, measured and finally what will be the reporting requirements for the
contract.
Planning to ensure that the right
people are available to manage software contracts is very important. The right mix of skills, experience,
aptitude and attitude are important ingredients of a contract manager. Planning to ensure the contract
management role duties are fully developed, undertaking recruitment to get the right person and then having
established the right retention strategies are also very important to plan and execute on.
The level of planning required
will be determined on the type of software contract; strategic software contracts would have a lot of
planning, whereas at the other end of the scale transaction software contract would have minimal planning
undertaken. Generally software contracts fall within three categories; Strategic, Operational and
Transactional. As stated before, strategic software contracts require the highest level of planning,
operational software contracts some planning is required to ensure operational requirements can be met and
transactional software contracts would have minimal planning. Strategic software contracts can be classified
as supporting strategic business systems, they require the software vendor to be closely aligned to the
business and the software contract may be quite complex in nature. If the software vendor fails in providing
software and software support, to support the business system, then the business will be highly affected.
Operational contracts support the day-to-day requirements of the business. This software support also
requires the vendor to be aligned to the business, however if the software or the software support fails, it
is not a critical failure to the business. Recovery of the business system whilst disruptive, it is not a
critical failure to the business. Transactional contracts are usually based on an event where a purchase of
software and/or services is undertaken. The software vendor does not have to be aligned to the business as
they do not provide software or services that support critical business systems. Often they are providing
commodity software and/or services that can be provided by another software vendor as
well.
A risk analysis should be
undertaken during the software contract planning phase. The risk analysis will identify if the software
contract will be strategic, operational or transactional. When a software vendor is selected to provide
software and/or services, then the risk analysis can be transformed into a risk assessment based on the
specific software vendor that was selected for strategic and operational software
contracts.
The planning phase will also
identify the expected benefits that will be derived from the software contract. Included in this planning
will be the process on how to identify, monitor, measure and report on these planned benefits. A reality
test should be undertaken to ensure the benefits are achievable and that they can be readily reported on.
Benefits can be of a financial and non-financial nature.
In summary, software contract
planning is a necessary activity to undertake prior to releasing a contract to the market. Contract planning
provides a systemic approach to identify the software and/or services that are required and the dependencies
on the provision of the software and/or services. Software contract planning identifies the type of software
contract and importance to the business, what are the risks, benefits and how will the software contract be
monitored and measured for both risks and benefits. Planning to select the right staff to undertake software
contract management is crucial.
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