Jeff Seabloom, Managing Director –
I’ve recently been involved in a number of Unlimited License Agreement (ULA) negotiations where the contracts were full of arcane, intricate and complex terms and conditions – nothing new there, that’s the nature of the beast. However, I was struck by the fact that on three occasions, my team and I – all industry veterans – encountered no less than 20 items that we had never seen in an agreement. What was more surprising was that in two instances we discovered specific terms that directly negated or contradicted other specific terms – within the same agreement.
This led to several hours of consideration and head scratching, after which we deemed the items in question as falling into the category of “Why the Final Signature?” (WTFS). In other words, why bother? Why spend days and weeks pouring over the minutiae of a complex agreement in the belief that this attention to detail is necessary to build a partnership that benefits both parties – only to learn that the agreement is so one sided to the provider that very little “partnering” is considered.
Existential musings aside, the answer is that the Ts & Cs in today’s contracts have to be painstakingly analyzed, parsed and understood in all their complex glory. Otherwise, clients are likely to have those minutiae used against them later in the contract term. As hardware and software agreements – particularly ULAs – become increasingly impenetrable, clients need access to narrow, deep and specific expertise around individual vendor licensing strategies and sales techniques.
Lacking that expertise, clients are at risk of signing bad deals. One trap is that the myriad intricacies and multiple price points in the contract come back to haunt you. Customers will sign on to a ULA only to learn after the fact that the additional licenses they expected to acquire may be excluded from the umbrella agreement. Or they’ll realize that vague language on assignment and usage – such as, for example, how “North America” is defined – doesn’t mean what they initially thought.
This “fine print” strategy of the ULA works hand in hand with the “you’re getting a special deal” approach. Vendor account teams plead year-end management pressure to make their numbers, and convince clients they have “leverage” to drive a favorable agreement. The ULA that is offered upfront as a prized concession loses its luster downstream when specific language and clauses turn out be not an advantage or premium after all.
Bottom line: Negotiating a software contract is a challenging proposition under the best of circumstances. Proceeding without technical and contractual expertise and specialized knowledge of vendor strategies makes it downright scary.