The upgrade peril

Within a constantly developing market, Ziad Choueiri of The Rights Lawyers looks at the legal implications of upgrading your existing IT/IS networks

Tags: The Rights LawyersUnited Arab Emirates
  • E-Mail
By  Ziad Choueiri Published  March 28, 2009 Arabian Computer News Logo

It’s clear in this day and age that those that fail to keep up with technological advances will find their competitive edge diminishing. In a world where systems can be deemed obsolete in a year, a constant focus on upgrading and developing one’s IT and IS infrastructure is integral to continued success and survival in the market.

For IT departments, the decision may partly be about keeping up with the market. However, for management the same decision includes the issue of cost effectiveness and maybe more importantly for CIOs – the issue of proper risk allocation.

Updating a system requires shopping around for the best providers. Consideration will have to be made as to whether an off-the-shelf IT or IS package is to be implemented or a custom designed application. In either case, users of IT or IS services are at a substantial risk when purchasing, developing, testing and maintaining the system. It is prudent to conduct a legal due diligence prior to any purchase of a major new system or infrastructure. Careful consideration must be taken when deciding which application is necessary to acquire to update your current IT or IS solution or if a whole new package is in fact what is required.

The following conditions should be carefully scrutinised prior to putting pen to paper:

• When initially discussing the details of the IT or IS solution with the developer, a great many promises and assurances will be made by the sales team. More often than not when presenting the terms of the contract, certain aspects will have been neglected or subject to certain conditions that were not initially communicated sufficiently during the presentation.

When choosing a developer, the primary offer made during the preliminary discussions may appear attractive. Examples would include 24-hour maintenance, on-call technicians, warranties in regards to performance or even the exact nature of the system and what it would offer. It is critical that these kinds of representations made during the initial pitch process are reflected accurately within the terms of the final contract.

• Costs and payment terms should be clearly and expressly cited. When would payment be due? Are there stages that would have to be successfully completed prior to the forwarding of funds? This ties in directly to the testing phase for the completed system.

• Testing: Ensure the system you are paying for meets the requirements you need in order to provide you with the necessary upgrades. The testing phase allows the purchaser to clearly understand the function and application of the IT or IS upgrade and how it seeks to better the current application, in addition to ensuring of course that it works as intended.

• Technical terms included within a contract. These are often familiar to those only with knowledge and expertise in the field of IT and IS. Many management personnel may not fully understand what it is that the system upgrade yields and they are often led to believe by the developer that the technical terms that appear ambiguous to the purchaser are indeed the upgrades they are seeking. Full understanding of the terms and functions of the system are central towards ensuring the right package is being inducted into the overall infrastructure.

• Off-the-shelf or custom developed? It is quite common to request certain specific inclusions or functions within the IT or IS application that can perform certain tasks and process information at a particular rate.

When opting for a custom developed system the issue of intellectual property comes into play. Bootlegging a previous design or system used by a third party for which the third party may have secured intellectual property rights could lead to unwelcome lawsuits for copyright infringement.

The developer should be made to carry the risk and liability for assuring the purchaser that the system upgrade being installed is unique to them and isn’t a replica of a package sold the week before!

• Exclusions and limitations included within the contract referring to a successful integration with the current IT or IS network may contradict what was initially put forward by the developer. Often when upgrading an IT or IS network, aspects of the current application may be maintained.

As such it is important that any new software or hardware installed does not conflict with the current configuration and may easily be integrated. Technical terms included in this part of the contract should be reviewed as soon as possible by the IT manager.

Frequently IT and IS contracts are either overlooked or taken too lightly as they often don’t reflect a profit yielding agreement for the purchaser, rather an upgrade to their operations. This couldn’t be further from the truth. A weak position for the purchaser within an IT or IS contract could in fact yield a significant increase in costs through a system integration that has not merged properly. It may also present a significant number of problems leading to costs included in repairing and correcting the situation due to the lack of technical support provided under the presented warranties, for example. It may even result in a potential lawsuit if the issue of intellectual property is not dealt with correctly or the risk and liability for such a breach of confidentiality is not clearly allocated from the beginnning.

The underlying issue throughout the entire procedure that should always resonate in the back of one’s mind when approaching an IT or IS contract, whether it be for an upgrade or an entire replacement, is the aspect of risk allocation. It is common for the purchaser to know little about the intricate details and functioning of an IT or IS solution.

Representations made during the initial sale which are mirrored in the contract coupled with the appropriate warranties should provide basic protection when considering the above points, although it is always advisable to seek legal advice before any commitments are made. After all, without an up-to-date IT or IS solution, keeping up with your neighbour may need more than just savvy business sense.

Ziad Choueiri is a solicitor with the Rights Lawyers.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code