NET(net), Inc.


Yours, Mine or Ours by jigordon
January 31, 2008, 9:54 am
Filed under: contract management, contract terms, metrics, risk

Every major (and most minor) sellers have a contract/agreement template that they will send you to sign at the time you purchase their product. Sometimes is as simple as a click-through agreement inside the installation process. Sometimes it’s a multi-page license and services agreement that takes weeks/months to negotiate. But if they send you their template form, they want you to use it.

Why?

Because starting with their template gives them power. They wrote the document covering those things that are important to them and with language that is obviously agreeable to them as well. Do you sign it?

Most people do – without looking. And frankly, that scares the heck out of me. If you’ve been following along these last few months, you know that I’m putting contracts into a contract management system. Along the way, I’ve seen a heck of a lot of not-so-great deals that were “just signed” because someone on the seller’s side knew that if you start with a form, the Power of the Template(TM) usually kicks in.

So how do you counteract the Power of the Template™?

First: You need to remember that a template is a suggestion, not a mandate. If the seller really wants to sell their product, they will negotiate.

Second: Negotiation means that they will modify their template with changes you make and will sometimes even use YOUR template.

Third: Wait! Your template? Do you even have a template? Depending on the situation, if you know you’re going to be consistently buying a certain type of good or service, then by all means, you should have a template for that type of transaction!

For me, this means that I have at least 10 template agreements: at least 2 types of NDA (unilateral and mutual); a Software License and Services Agreement (covers EVERYTHING anyone would want to buy when they buy software: software, maintenance, installation, training, consulting, etc); a Master Services Agreement (for non-IP-related services like mowing the lawn); a Consulting Services Agreement (for people developing IP for me, like new software code, design, etc); a Statement of Work and a Work Order template (to make sure that I always cover the concepts I want in my orders); and an Amendment and/or a Change Order template (yes, a little much at times, but good to have).

In some cases, I’ll even develop my own ASP/SaaS template (if my organization does a lot of that kind of buying).

Now, you might say “But Jeff, how can I create a template for software or ASP stuff when I have no idea about how the vendor licenses their product?”

Well, you’re right… it’s a bit more tricky to develop these templates from the buyer’s perspective and you have to include a lot of extraneous things (like definitions for all of the known software licensing metrics). But it can be done… and once you have it, you can start to enforce the use of your templates. This will result in two positive things for you:

1. Your speed to deal completion will increase. I don’t know if you’ve been measuring how long it takes you to negotiate a deal, but the huge time-sucking thing at the beginning (the first read-through/red-line) takes an incredible chunk of time. Off-loading that to your vendors is a huge time-saver. And even if the length of time on the deal signature doesn’t decrease, YOUR time is freed for other things.

2. You can measure the number of deals on your paper versus those on vendor paper (ie: managing risk). Which is a metric you can share with your management regarding a decrease in overall contractual risk. I simply tell my vendors the truth to get them to use my template, combining these two points: If you want to close this deal in a relatively short amount of time, you’ll start with my document.

But writing templates is initially time consuming and requires a great deal of thought and organization. It’s not something you want to do in a hurry and it’s not something you want to do if you don’t have a significant amount of experience in the subject matter of the template. So don’t be afraid to seek out help.

Anyone want to share their experience in using their own templates?



SLAs by jigordon
January 22, 2008, 10:14 pm
Filed under: metrics

Joel Spolsky over at FogCreek is talking about SLAs.

I responded.

Stephen, I know you have something to say on this.

Anyone else?



Writing Contractual Requirements by jigordon
January 21, 2008, 9:54 am
Filed under: metrics

Last year, we spent the bulk of our time talking about a variety of what I’d call “base-level” contract terms.  Term, termination, breach, warranties, assignment, indemnification, etc.  But these are just usually the starting points for the relationship with the other party.  In almost all cases, you’re going to have at least one other document that actually describes what the other party is going to do for you (especially if you’re a buyer of services).  So, for 2008, I want you to improve your ability to write SOWs.

A Statement of Work (or a Work Order) is an add-on document to the base-level agreement.  It really only needs four simple components:  1) A description of the work; 2) A time-frame in which the work will be completed; 3) A way to measure that the work has been completed; and, 4) A description of how payment will happen.

Unfortunately, each of these four areas can get a bit tricky, even when you’re talking about a single piece of work.  When multiple SOWs start interacting together, things go from bad to worse.  In the next few weeks, we’re going to talk about each of these areas in sequence.   However, before you start writing SOWs for your customers or clients, I suggest you always, always, always, step back from document to talk with the project manager.

The reason for this discussion is that you need to have a perfectly firm grasp on what goals you seek through the creation of this SOW.  We’re going to do this with Peter Drucker’s SMART mnemonic, which we’ll use again in measuring the work (because at the end of the day, you’re writing this SOW for the measurement of the work).

SMART is an acronym that stands for Specific. Measurable. Achievable. Realistic. Timely.

Specific:  You need to be VERY clear.  You can’t just say, I want a content management system.  You need to say that you want a particular vendor’s particular version of a content management system.  This throws a lot of people off, especially the project folks.  They know what they’re talking about.  They believe that the vendor does, too, so why be this anal-retentive?

Measurable:   It’s hard to have a goal when you can’t tell whether you actually achieved the goal.  Telling the vendor to install the content management system isn’t enough.  You need to be able to say that you actually crossed a finish line somewhere.  Most contracts use dates – the content management system must be installed and in production by March 1, 2008.  Now you can say whether or not it actually happened per the agreement.

Achievable:  It might sound obvious that you want to achieve your goals.  But you might be amazed to discover that many goals simply aren’t achievable because no one has wanted to admit that the goals, as stated, can’t be reached.  If you’re trying to install “the best” content management system, you’ll have a much more difficult task than if you’re trying to install a content management system that has 5 key business features/functions and is compatible with your 3 related key existing systems.

Realistic:  If the installation of your content management system is supposed to happen by March 1, 2008, but it’s actually today and no work has been done, it’s not likely that all the work that has to happen can really happen by March 1.  Sometimes it’s easy to get swept up in the excitement of a new project and over-deliver… this is not a wise move.

Timely:  Well, I used the dates in the Measurable section above, but they’re true here, too.   You have to use time as a way to bind the parties.  Otherwise, some projects seem to take on a life of their own.  We use deadlines as a way to drive to successful project completion – and as a way to check and see if milestones have been reached.



What does it take to start a conversation with you? by jigordon
January 20, 2008, 9:54 pm
Filed under: feedback

OK.  I’ve had over 113,000 hits … more than 100,000 reads.  Oh my god.  Seriously?

Yeah.  Really.  I’m shocked.  I didn’t know that many people were really interested in this set of topics.

But I’ve been trying to start a conversation with you.  I want your feedback, your comments, your ideas, your thoughts – anything on your mind.  These topics aren’t static – we have a lot of issues going on daily that need smart people to consider and write about.  YOU are those people.

However, I don’t seem to be able to encourage you to write to me or comment on my posts.  I’ve tried controversial topics, controversial ideas, provocative comments – even bribes.

So, what does it take? Even if all you want to tell me is “Shut up, Jeff, we just like to read what you write.” ok, then tell me that.  But at least let me know to stop expecting comments.

Please don’t think me whiny – it’s just really hard to tell if I’m doing/saying something valuable without feedback.  🙂

See you on Tuesday… we’re going to be talking about SOWs.



Cna yuo raed tihs? Olny 55 plepoe out of 100 can. by jigordon
January 15, 2008, 9:54 am
Filed under: communication, contract format, fun

Cna yuo raed tihs? Olny 55 plepoe out of 100 can. i cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it dseno’t mtaetr in waht oerdr the ltteres in a wrod are, the olny iproamtnt tihng is taht the frsit and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it whotuit a pboerlm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Azanmig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt!

from http://swissmiss.typepad.com/weblog/2008/01/cna-yuo-raed-ti.html

Forget about automated spell-checkers for a moment… I wonder what effect this would have on contract reviews.  Or, more specifically, contract accuracy?  Would it matter at all?  Thoughts?



Pounds versus Ounces, or How I Learned the Value of Reviewing Agreements BEFORE Signing by jigordon
January 8, 2008, 9:54 am
Filed under: contract management, negotiation, risk

I got an e-mail from a friend of mine a few weeks ago. I saw it coming in, watching the progress bar slowly move, wondering what was attached.

Since I was the recipient, I should have known it would be a contract. Sho’ nuff.

In classic hindsight form, the e-mail was pretty much a one-liner: “Check out the last line of the attached contract.”

Um, ok.

So I ask of all of you… what’s the value of fully reviewing an agreement before you sign it?  I suggest that it’s about 1/10th the cost of reviewing afterwards.

To be frank, there’s not much more to say on this topic.  When you get an agreement, review it.  Sounds simple, as most contract-related things do.  But it’s putting it into practice that’s the rub.

First you have to actually GET the agreement.  Sometimes that means begging or borrowing.  Then you need to read it.  This requires someone with the skills to know what they’re reading.  Sometimes that means a lawyer, sometimes that means a contracts professional… sometimes it just means YOU (who may or may not have the background to do the job).  Thus, reading isn’t enough.  Comprehension is also required.  So ask questions, dig for answers.  Make certain that anything you don’t understand is written in a way that you do understand.

Typically, this is the negotiation process.  Then, when you think you’re done.  Re-read the entire things again with the new language.  Make sure that the whole agreement flows together and that inter-document referrals make logical sense (ie: if it says see section 10 and there isn’t a section 10, you need to revise the agreement again).

OK… here comes the fun part.  Start thinking of the “what ifs”.  These are the problems that might happen.  The maybes.  The “what happens when x happens” questions.  My business owners tend to get frustrated at times when I ask these questions.  Their eyes have turned rosy.  My eyes, however, are clear and I remember what a mentor once said to me: “Contracts are not for the marriage… they’re for the divorce.”

Now, and only now, should you start to think about signing it.  All of your power exists right before you both sign and most of your power is lost once signed.  So if there’s something you want to clarify, explain, elaborate, etc…. do that now.

Does it still look good?  OK.  NOW you can sign.  (But make sure you get your fully-executed copy for your records.)



Do you need a helping hand? by jigordon
January 7, 2008, 11:00 pm
Filed under: book

OK, I admit that I’m an online junkie. I have my own websites (yes, more than one), pages on LinkedIn, Myspace, FaceBook, and dozens of others. One of the most interesting things to do on FaceBook is to take quizes. You get a score, then you compare your score to others. The vast majority of the topics are completely banal and are simply for fun. I saw someone take the online quiz format, however, and use it to encourage understanding as to whether more information was needed on a particular topic. Yes, it’s advertising. But it’s effective, as it helps you, in a fun way, to see how the offered product/service would be of benefit.

I would like to try this with respects to licensing and whether the Software Licensing Handbook would be something that would help you in your work life (as I don’t think anyone would want to admit that licensing is something for a person’s personal life). I hope you’ll forgive the blatant nature of this post. I’m going to make up for it with several other actually relevant posts. Here we go – without further ado, I present to you

The Software Licensing Handbook Quiz
I don’t have a cool interface, so grab a scrap a paper and a pencil and keep track of your answer choices. For those of you anal-retentive folks who want to write out the numbers first (like me), there are 10 questions.

1. In my day-job:

(a) I routinely (personally) buy/sell software products.

(b) I am a C-level exec.

(c) I am a professional contracts person.

(d) I am none of the above.

2. My educational background includes:

(a) A law-related degree (law/para-legal)

(b) A business-related degree (Bachelors or Masters)

(c) An English degree (as in reading/writing, not the language itself)

(d) Anything else.

3. You’ve been “into” software licensing issues for ___ year(s).

(a) 1

(b) 3

(c) 5

(d) more than I’d care to admit

4. In an average month, I read ___ new agreements (any kind of contract).

(a) 0-5

(b) 6-10

(c) 11-20

(d) more than my eyes can tolerate

5. Yes/No: I’ve written my own template license agreement from scratch (or close to scratch).

(a) Yes.

(b) No.

6. Yes/No: I own at least one other contract drafting handbook, manual or guide (by H. Ward Classen, Ken Adams, for example).

(a) Yes.

(b) No.

7. When negotiating, I am ______ successful on my contractual term desires.

(a) Seldom

(b) Sometimes

(c) Frequently

(d) Always

8. With respects to warranties, I would allow disclaimers for merchantability, non-infringement and fitness for a particular purpose.

(a) Yes.

(b) No.

9. When negotiating confidentiality language, there are ___ exclusions commonly used.

(a) 1

(b) 2

(c) 3

(d) 4

10. I prefer a __________ software license and an ___________ maintenance agreement.

(a) fixed-term, perpetual

(b) subscription, subscription

(c) subscription, perpetual

(d) perpetual, annual

Scoring:

For each question, match your letter answer with the associated point value in the list below:

1. a=4 , b=3 , c=5, d=2

2. a=3 , b=4 , c=4 , d=5

3. a=5 , b=4 , c=3 , d=2

4. a=5 , b=4 , c=3 , d=2

5. a=3 , b=5

6. a=5 , b=3

7. a=5 , b=3 , c=2 , d=4

8. a=2 , b=4

9. a=5 , b=5 , c=5 , d=1

10. a=5 , b=4 , c=5 , d=2

Now, add up the point values for each to get a total score:

49 – 40 : You would most likely benefit greatly from the Software Licensing Handbook.

39 – 30 : You’ve got some experience but the Handbook would still serve you well. Time to take the next career jump.

29 – 22 : You show some contract skills. Why aren’t you commenting on my posts?

<22 : Nice job. But I would like to know how you scored less than was actually possible.