Negotiating license agreements – What the large print giveth the small print taketh away

You’ve completed the negotiation of an EA, ULA, VPP or similar enterprise license agreement for your company. Legal are happy with the wording, your CTO is happy with the scope and your CFO is satisfied you’ve gotten a good deal on the commercials.  Nothing left to do but sign the contract and enjoy the lunch the vendor account manager will no doubt offer you.

Think again.

It is almost certain that some of the concessions you think you have gotten from the vendor have not actually made it into the final software license contract or if they have they carry constraints or limits you were unaware off.

It is not that the Account Manager has been dishonest but during the negotiating process there can be many options discussed and even if these options are documented what gets translated into the final agreement (usually by a 3^rd party) may not reflect the spirit or intention of the negotiating parties.  It can also be your understanding of a particular definition (e.g. device verses user based license) differs from that of the vendor.

Some common misunderstandings:

• You get 100 free trial licenses (but must pay full price if used in production)
• The products you want are covered by a particular bundle (but the bundle contains other unwanted or expensive options)
• You believe any division of the organization can use the software (so long as they are in this country)
• There is no charge for just installing (but you must prove it’s not used or pay)
• You get a significant discount on all products from a vendor if all items are on the same order form (you must continue to pay support on all products, even those not used, or loose the discount)
• It’s an unlimited license agreement (for specific products only)

So what kind of things need to be considered when reviewing the contract?

• Negotiate to remove any reference to products or services you are not using.
• Get draft order forms and contracts at key decision points in negotiation, don’t wait until the end.
• Give yourself time to review contracts to avoid “signing in haste, to regret at leisure”
• Where ever another document or web page is reference include a copy in the contract.
• Agree and include a definition of any key license metric, with a use case,  examples might be core count, managed device, test and production instance.
• Clarify the precedence of the documents.
• Impact of new agreement on previous purchases and support.

That all said, unless you are experienced with license renewals and vendor specific contracts you should not try to take on the task of verifying a license agreement yourself.   Get the advice of an independent software license consultant, they do this every day as part of their job.  They will complete the review faster and more completely than someone who only does it every two to three years.

Don’t lose value from the deal you have so skilfully negotiated to  “the small print”

 

PS:  I found this example of getting caught out by small print, can you spot the catch?  Double click for a closer look