Although not creating new law, the decision in the recent case of AstraZeneca UK Limited v International Business Machines Corporation 2 provides some salutary lessons for both suppliers and customers of the importance of planning for exit from the outset of any complex ICT outsourcing deal. The case concerned the scope of “Termination Assistance” that was to be provided by IBM following termination of its Master Services Agreement with AstraZeneca. The decision throws the spotlight on an aspect of IT outsourcing deals that all too frequently does not get the attention that it should.
Our practical tips for ensuring that the benefits of any exit regime are maximised include:
- Agree the principles and contractual framework for the exit plan pre-contract and ensure that clear and unambiguous drafting is used to reflect this in both the agreement and exit plan itself.
- Ensure that the exit plan and exit management process are developed early in the contract lifecycle and are regularly reviewed and updated during the term of the agreement. This will enable the parties to fine tune scope and address any new issues.
- Ensure that the exit regime addresses the provision by the supplier of exit assistance (effort over and above the day-to-day services), and how the price for such assistance will be determined. This should include co-operation with any replacement suppliers.
- Ensure that the exit regime addresses buy-back and valuation of assets used in the provision of the services; the transfer of any third party contracts that are critical to ongoing service provision, and appropriate post-term rights to use intellectual property and software.