An unsuccessful software implementation is painful, for both the customer and vendor. Where there is either a complex implementation or major software customization, there is also a significant risk of big problems, delays and possible failure. Upon such a failed implementation, heads will roll at both the vendor and customer.

Therefore, when embarking on a software implementation project, negotiating the contract is as important as selecting the right vendor. A well-negotiated contract sets expectations, mitigates risks, and ensures a smooth process. Here are critical areas to specify in any software implementation agreement:

① Description of Deliverables 📦

Clearly describe the software and services the vendor will deliver, including features, functionalities, and documentation. Avoid ambiguity to prevent misunderstandings later.

② Roles and Responsibilities 🛠️

Define the roles and responsibilities of both the vendor and the customer. Specify who will manage the project, handle data migration, and provide support. This ensures accountability and prevents tasks from slipping through the cracks.

③ Milestone Descriptions 🗂️

Break down the project into specific milestones with detailed descriptions. This helps both parties understand progress and monitor the project’s pace.

④ Milestone Dates 📅

Specify dates for each milestone’s completion. These dates provide a timeline and help keep the project on track. Include a buffer for unforeseen delays but maintain clear expectations for timely completion.

⑤ Accounting for Out of Scope Work 🔍

Projects often evolve, leading to additional requirements. Outline how out-of-scope work will be handled, including identification, estimation, and approval. This prevents scope creep and aligns both parties on project inclusions.

⑥ Change Order Process 🔄

Changes are inevitable. Establish a clear change order process to document, assess, and agree upon modifications. This helps manage expectations and avoid disputes over unauthorized changes.

⑦ Acceptance Testing, Criteria, and Definition of Acceptance ✔️

Define how the software will be tested and what criteria will be used to determine if it meets specifications. Specify when acceptance occurs, such as after successful testing or failure to notify of errors during testing period or upon use in production. Clear criteria protect both parties by ensuring the delivered software meets standards.

⑧ Vendor Efforts to Correct Problems 🔧

If problems arise during acceptance testing, specify the vendor’s obligation to correct them promptly. Detail the timeframe for addressing issues and retesting the software. Include consequences if the vendor fails to correct these problems, such as withholding payments, penalties, or contract termination. This ensures the vendor delivers a functional product and protects the customer from prolonged delays or subpar software.

⑨ Consequences for Vendor or Customer Delays ⏳

Delays can occur on either side. Outline consequences for both vendor and customer delays, including penalties, timeline extensions, or scope adjustments. This encourages adherence to the schedule and provides a mechanism for addressing setbacks.

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