Ensure the legality of your software asset management programme


The Addleshaw Goddard Technology & Outsourcing team has helped many clients at every stage of their relationship with IT suppliers, tailoring its service to best suit the situation, needs and objectives at hand. This experience has led AG to collaborate with EasySAM so that together we can provide a joined-up view of the legal, technical and commercial aspects of software asset management – giving clients a more holistic perspective in relation to advice and impact. It also provides the potential to protect that work by way of legal privilege, where appropriate.

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Working on many hundreds of technology and outsourcing contracts, contractual issues and disputes each year provides AG with a unique vantage point of the key contract terms and areas that become hot spots for negotiation and challenge. They offer critical insight into aspects of software licensing that you may want to consider to protect your interests – both to maximise prospects of success and to minimise risk.


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About the Addleshaw Goddard Technology & Outsourcing team

AG's large team of Commercial law experts help to safely and effectively deliver significant IT projects, predominantly for major client ‘buyers’ of technology. AG has a track record of delivering transformational and business critical deals for large companies, including FTSE 100 clients and public sector equivalents. They regularly act opposite all major IT suppliers.

AG's Commercial Disputes team work alongside its Commercial team daily to assist clients in resolving a broad range of issues and disputes. These often involve IT outsourcing, changes in specification/scope, project delivery delays, under-licensing (direct/indirect use/access) and performance issues/failures. They brings clients the right choice of escalated dispute resolution processes, often working behind the scenes to get matters resolved favourably. This might involve negotiation, mediation, expert determination, arbitration and/or court proceedings to achieve successful commercial, legal and financial outcomes.


Case Studies

Under-licensing

In a leading case, AG advised a global beverage business, which initially related to a £50+ million claim by SAP triggered by relatively modest infrastructure and database connectivity changes by the client. SAP alleged all the client’s customers and sales reps using separate systems that interacted with the SAP ERP system were “indirectly using or accessing” SAP ERP and therefore needed Named User licences. SAP further argued that such licences needed to be at Professional User level (which carried a high user licence fee).

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The progress of the case was poorly reported, with few (if any) accurately summarising the outcome of the trial and significant success that it represented for the client in reducing liability to a small fraction of the original fees alleged by SAP. This enabled the parties to subsequently settle out of court; with the final outcome being confidential.

This decision has had implications beyond SAP, and will impact a lot of companies and their licensing strategies in the future, as well as their annual renewal negotiations with key vendors. Vendors are moving away from the traditional Named User software licence pricing model (including SAP - https://news.sap.com/sap-unveils-first-of-its-kind-new-pricing-model/). They are considering how to develop their models against a backdrop of increasing levels of often unintentional "indirect" or "digital" access to their software via individuals using third party software, automated interfaces, and bots.

Given the SAP case is on the public record, AG can advise you on opportunities that it presents to deal with and effectively counter such under-licensing claims.

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Large-scale global IT managed services outsourcing

AG acted for a major engineering company on the outsourcing of various bundles or towers of IT services including managed network services, application management & support, datacentres, and SI & desktop. They supported the $1 billion spend transaction by:

  • Preparing the base contract documentation
  • Negotiating with the four key vendors who were ultimately appointed
  • Securing local advice in key jurisdictions to ensure consistency of and confidence in the terms

This ensured that the project was focussed on achieving the client's key objectives and that, in doing so, prospects of success were maximised and risks were minimised.

Financial Services sector

The EBA Guidelines came into effect on 30th September 2019, changing the requirements that apply to outsourcing arrangements (including cloud / SaaS licensing arrangements). All new agreements have to be compliant with the EBA Guidelines, and all legacy agreements need to be remediated by the end of 2021. AG has experience of negotiating with cloud and SaaS suppliers to achieve terms and conditions that are appropriate for the financial services sector and the complex regulatory landscape that underpins it.

In particular, AG offers a toolkit of services and products to support banks, building societies and other financial services firms in achieving and maintaining compliance with the EBA Guidelines throughout the full outsourcing lifecycle:

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Review:

  • Their RAG EBA contractual checklists standardise the review process to assess compliance of new and existing contracts
  • Digital dashboards and trackers manage and track the review process

Remediate:

  • Drafting and negotiating variations to address compliance gaps
  • Project managing the remediation process to reduce the strain on procurement and in-house legal teams
  • Digital dashboards and trackers manage and track the remediation process

Negotiate:

  • Drafting, negotiating and advising on outsourcing agreements using tools and precedents to deliver efficiently, led by experienced lawyers with a commercial and pragmatic approach
  • Drafting EBA compliant templates and accompanying user guides with commentary on the regulatory requirements, fall back positions and guidance on proportionality to streamline negotiations
  • A template tender letter to summarise the regulatory requirements to inform and educate suppliers upfront

Manage:

  • Advising on internal compliance programmes to achieve compliance and monitor and mitigate risk
  • Providing bespoke training to key stakeholders
  • Using digital solutions to create and manage the outsourcing register required by the EBA Guidelines
  • The AG EBA Ready cloud solution helps Procurement and Legal teams to categorise contracts, manage risk and generate bespoke action lists

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