No business can function without software but software licensing can be a minefield for the unwary.  See Part 1 here.

Tip 6 – Data security

You have to keep personal data secure and so must your software supplier. You are primarily responsible for and you should check your supplier’s licence clarifies what it will do to ensure you comply.  Also, see our reports on data security.

Tip 7 – Back-to-back terms

If your supplier is reselling a third party service, such as hosting or storage in the cloud, the supplier will probably carry over terms insisted by its provider. This “back-to-backing” allows your supplier to pass obligations and liabilities up or down the chain so you should check whether it works in your favour.

Tip 8 – Service levels and credits

Service credits are losing their appeal. You have probably worked out that your supplier will simply increase its charges to offset the cost of service credits. It is often better to put in place a resilient service than trying to claim under cumbersome service credits which will never adequately compensate your businsess.

Tip 9 – IP indemnity

A supplier selling proprietary software will usually offer an indemnity against claims that its software infringes someone’s intellectual property rights. This is one of the key battle lines between proprietary and open source sellers. But don’t forget, an indemnity is only usually any good if the supplier has appropriate insurance, so check this.

Tip 10 – Compensation for complete failure of service

Even if a supplier refuses to pay service credits, you might be able to sue them for a complete failure of service. However, check the liablity exclusions in the licence. And don’t forget, tt’s usually cheaper to pay extra now for a better service than trying to sue them later for service breaches.