My name is Hayden, I’m a partner in HopgoodGanim’s Intellectual Property and Technology Division. HopgoodGanim is a national law firm. My practice generally comprises of advising clients on intellectual property issues both in terms of protection, commercialisation and enforcement. As well as looking at information technology, procurement agreements, licensing, SaaS-based arrangements, and informational privacy risk.
So I suppose that’s the idea of well, software. If I buy software or a software service from a really big company, I’ll be safe. I can understand the mindset behind that, we all sort of go through that kind of mindset when we buy things from time to time. The reality is though there is only so much value you can attach to a really big brand. And you know, experience also tells us that you can enter to a contract with a massive company with a three letter name and a blue logo for instance, and big problems can still arise.
So entering into a contract with someone who’s big is not necessarily the answer to your solution and it might mean you’re paying a lot more money as well. You might be able to get a solution that is actually way better suited to your requirements, and it could be a fraction of the cost from a large vendor.
And what other, I guess, insurance could you get to make sure that you’re comfortable? Well a fear often might be that be a small provider have taken an agreement and it’s a fixed term agreement to use your workforce software services. My business depends on it, so what happens if the small vendor goes insolvent or disappears overnight? How do I then continue to run my business? Given that your workforce software, your service is the key to the continuity of my business. Well the easy way to resolve that is simply by something such as a source code escrow agreement. That basically says that upon certain events, the source code of the solution will be released to you, the customer, and you can then have a perpetual right to use that source code to run your software internally within your business. And the most common release of that will be insolvency for instance.
So with an escrow arrangement, you can get the insurance you need in terms of making sure that you can still ensure that your business will not be affected if a small vendor disappears overnight. You still get that continuity in place, but you also get the added benefit of perhaps more better suited solution and the cheapest solution. Without having to go to a really big company to get it.
Ask some questions about it and make sure you understand who the infrastructure provider is. Where they’re hosting the data, is an important one to make sure that you know where the data is going to be physically located. So a lot of time people won’t even ask the question, but a good vendor should be able to give an answer to that pretty quickly because they should have negotiated that with their infrastructure provider. So I think that’s really a key question. The other thing you could do is to get some more information around what assurances does the infrastructure provide around privacy compliance. Do they, themselves agree to be bound by the Privacy Act? If they’re an Australian subsidiary of an organisation and they’ve got operations within Australia, that gives you some assurance there is the necessary Australian link to be bound by the same laws to what you’re concerned about complying with as well. It’s just doing a bit of background due diligence I think. It’s something that could be managed both contractually and technically though.
If you are agreeing to fixed term contract for a period of time. You can give certainty as to price. You might do something that gives the customers some level of control over price. So put it in their court, control price by the number of users, or the number of transactions or something like that. That gives the customers the ability to sort of have some control on how much they wanna pay. Obviously, the customer needs to do the math to make sure that pricing metric commercially works for them, but if it is something that they’ve done that analysis on, and they can control it, well there’s not so much to fear really is there. And on top of that it is the subscription arrangements. So at the end of the subscription, if you don’t like it, you can always go elsewhere.
APIs are really important in terms of the way particularly, I guess in the way that cloud based infrastructure works. So these days we’re more talking about the data itself and way you can integrate data with other applications. So APIs or Application Program Interfaces are critical to that. And being able to ensure that you’re dealing with people that I guess contractually say that they will do their best to try and maintain interoperability with the other applications that speak to whatever cloud vendors application this might be is an important thing to consider. But bear in mind also, that sometimes working in an environment where I guess multiple applications are talking to one another. One vendor might release a new release or a new version to a software which might affect the other and have that all glues together via the APIs. So that can cause issues from time to time. What you want, I guess is to make sure you’re dealing with a vendor that is willing to react quickly to those problems. Who do their best to try fix things up quickly and promptly to ensure continuity in the business which is the biggest thing there, from a commercial perspective, the customer is going to be seeking.