How to avoid disputes when implementing a new IT system

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Every business will outgrow its IT systems at some point. Usually a complete overhaul is required. Most businesses experience delays, cost overruns and changes in specification doing this, to name a few complications. Here are some tips to guide you through the maze of IT system changes and help you avoid any unwanted problems.

1. Get the contract right

Create a tailored, bespoke contract and avoid using standard terms and conditions. Standard terms and conditions should only be used for low value, small projects. The IT contractor’s terms are likely to be very one-sided (i.e. in their favour), so please read them carefully before signing because if there is a dispute, you are likely to be bound by those terms and conditions. If you intend to spend a considerable amount on your IT system then it is critical to agree a bespoke contract at the outset (the cost of this will be minimal compared to the cost of the IT changes and the dispute if you do not have a clear and agreed contract).

2. Properly consider documentation

It is critical that all key documents are considered properly and completed in full before entering into the contract. Cases often come down to what has been agreed in the contract, including in the functional and technical specification.

3. Use a specialised project manager 

Use a dedicated, in-house project manager, someone who has IT knowledge and is familiar with your systems, requirements and business. This individual (and ideally a couple of others) should be responsible for managing and progressing the IT project. They should be involved at an early stage to determine your IT requirements and act as a dedicated point of contact for the IT contractor. This will ensure consistency and minimise any misinformation, delays and cost overruns.

4. Be clear on the project specification

Be clear on the project specification –This includes both the functional and technical specifications. The project manager should assist with finalising these documents. Also involve some end users of the new systems and use their feedback to ensure the specifications will meet your requirements.

5. Create a structured process

A staged process with clear milestones is critical. Aside from helping manage cashflow, it enables progress of the project to be tracked and accommodates any unanticipated changes. There should be regular feedback/review meetings to minimise any nasty surprises and regular test stages to ensure the project is progressing smoothly and identify any faults. Avoid having one test stage at the end of the project.

6. Consider what could happen if things go wrong

Consider what could happen if things go wrong. Most businesses are heavily reliant on their IT systems, so if the new one fails you will need an appropriate backup system and support which can be deployed quickly to minimise disruption to your business. As part of the contract, you should agree an appropriate mechanism/procedure to deal with any disputes/problems with the IT system.

7. Protect your access rights

Give consideration to licences, IPR issues and bespoke software. Who will own these? How will you access them if a third party owns them? What happens if there is a dispute? If there is a falling out over the new system, you need to protect your access rights to the licences, software etc. This is something which can be included in your tailored contract. 

8. Be clear about responsibility

Ensure you are clear about who is responsible for delays and cost overruns. This should be mentioned in the contract. Are you working on the basis of a capped fee or hourly rate? Hourly rates can significantly increase costs.

9. Keep a detailed record

Record everything in writing from start to finish. Agreed action points should be circulated after each review/meeting. This is vital as the strength of your position in a dispute will come down to whether you can provide supporting contemporaneous documentary evidence.

10. Review everything, constantly

Finally, review everything constantly. If changes to key matters arise, you might need to vary the contract. Provided there is an appropriate variation clause in the contract, this should not be too hard. All changes have to be recorded in writing and agreed between the parties in accordance with the contract.

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