Writing for the Association of Corporate Counsel's Lexology website, attorney William T. Repasky recently offered some tips for financial institutions regarding IT contracts.
Given that the economy continues to struggle, Repasky said strategic software procurements or other IT-related investments can enable financial institutions to maintain or improve performance for a reasonable price and without the addition of staff. However, to see these benefits, it's crucial to shrewdly negotiate IT contracts.
Repasky stressed that research is essential before entering into any negotiation. Research can mean testing out software by taking advantage of demonstrations or trial licenses, he wrote. It should also entail speaking with others in the financial sector who have used the software under consideration. Most software contracts require financial institutions keep pricing confidential, but Repasky suggested obtaining a prospective provider's SAS 70 Type II audit report, which will contain valuable information regarding a provider's internal controls.
Don't hesitate to ask hard questions when involved in a negotiation, Repasky advised, particularly because all software or third-party IT services must comply with regulations governing the financial industry. He also suggested drawing up a list of minimum standards a contract must meet, which might include reasonable warranties and specifications about response time should a product fail or require maintenance.
With regard to maintenance fees, Forrester analyst Andrew Bartels has urged tech companies to consider a sliding scale pricing system, to account for the fact that as software ages and becomes more stable it requires less support.