Professional Documents
Culture Documents
MGMT 5
MGMT 5
Management in IT
Lecture 5
Contracts
Tomasz Bogucki
Sales process
B2C Passive sales
• AIDA Model
• Adhesion Contract
(prepared by seller only from the position of power – “take it or leave it”)
• Standard licenses
eg. Google Play Licensing
Prospects
Sales process
B2B Active sales Follow up Collect info
7 stages
Close the
Find
deal, sign
approach
contract
Analyze
Handle
needs and
objections,
make
negotiate
proposal
Preparing proposals
• Develop an attractive template
• Main content: addressee, scope, price (& tax), time
• Obligatory: expiration date
• Good to include: company profile, reference list (or letters), additional options
• If asked for an offer, agree on when will it be prepared and do not be late
• After passing the offer contact the client, asking if everything is clear, are all
requirements covered and about his impression. Send corrections if needed.
• An accepted offer is legally binding!
• Decision making on the customer side may take time
Negotiations
• Always take notes and send current arrangements to all participants after
the meeting
• Negotiate the final price in only one attempt, after settling other price
influencing matters, and only with the person authorized to make decisions
• Negotiations may take time, especially with large companies. Be patient
but don’t lose contact
• Don’t give up
Sales process of a product vs. cash flow
$
Marketing
Developing the
(reaching Selling Negotiations Contract Delivery
product
clients)
Marketing Developing
Selling Negotiations Contract Delivery
(reaching clients) the product
• Be sure to have 100% of the scope listed, that the items are unambiguous and
measurable
• Remember about non-functional requirements too
• Add what will NOT be done if there might be any doubt about it
• It’s not only about the product or service but ALSO OTHER DELIVERABLES / activities like:
• Documentation • Installation
• Training • Configuration
• Source codes? • Data migration
Ownership vs. license and IP rights
These two possibilities are available when building custom software per customer requirements
• Source codes – are they included and how they may be used, eg.
• Only in case of developer’s bankruptcy to secure bug fixing - ok
• Giving away development to a different software developer – bad
• The license for commercial use should be granted only upon payment
• This will save you from being left without payment, while the customer uses the product
Standard licenses
• Mention all open-source and 3rd party commercial licenses included in your solution
• Same goes to graphics, music, fonts, etc.
• Read these licenses before it is to late (before you include them in your product, before
you resell them to a client)
• Some open-sources or images are free only for non-commercial use
• Some licenses after binding codes require your solution to be free as well (copyleft)
• If the customer starts to commercially use the product, this should mean
unconditional acceptance
• Quality threshold – allowing the acceptance pass despite some defects, eg.:
Defect category Quantity admissible Fix deadline Payment withhold
Critical none - -
Standard 5 2 weeks 10% contract value
Minor 20 4 weeks 5% contract value
Penalties and liability
• Penalties - rather to motivate than to punish
• Usually for delay
• Should relate to both sides
• Good to have a grace period – eg. delays up to 2 weeks are not penalized
• Should be capped (max total fees) – eg. up to contract value
• Liability – covering customer’s losses resulting from product’s use
• Try to avoid all - difficult
• For sure avoid covering lost benefits (profits that have not been made)
• Always should be capped – eg. up to yearly revenue from maintenance
• Some cases cannot be excluded – based on the rules of civil law
• Never risk the companies existence by not capping fees and liability
SLA – Service Level Agreement
Conditions for maintenance (fixing and improving the product after delivery)
• Incidents (interruption of service) vs. problems (cause of incidents, eg. a bug)
• Incident management (restating operations) vs. problem management (bugfixing)
• Types of failures (eg. critical / standard / minor) with description
• Response times and guaranteed fix times
• Penalties for not complying with SLA, penalty caps (maximum values)
• Example:
Defect category Respose time Fix time Penalty for delay Max penalty/year
Critical 1 hour (24/7/365) 4 hours $100.000/case $500.000
Standard Same business day 2 weeks 1/12 of mntc fee Mntc fee value
Minor 1 week Next version 1% of mntc fee Mntc fee value
Non-disclosure and data privacy
Both parties commit not to release to the public any information acquired within the project, eg.:
Customer will not disclose information on: Developer will not disclose information on:
• The design of the software • Customer’s business model
• Algorithms • Know-how
• Weak points, bugs and incidents • Trade secrets: costs, prices, clients
• Contract prices and received discount • Internal infrastructure
• … • …