The trend toward choosing to outsource the administration of their Information Technology (IT) departments continues to grow among companies and governmental organizations.  In the new business world of outsourcing acceptability outsourcing contracts are routinely re-bid and re-awarded at the end of each contract.

ERP Software

Transferring ERP Software from one outsourcer to another

Previously, procurement of hardware, software and maintenance, was a function retained by the customer, but as this practice goes the way of the horse, third party procurement issues have arisen. An added layer of complexity comes with third party administration of a company’s ERP system along with the rest of its technology infrastructure.

When it comes to the ERP software system piece of infrastructure the transition team must completely head’s up to additional considerations involved in the procurement and transfer process associated with hardware, software and maintenance agreements and licensing terms. Some considerations:
1.    Software and hardware licensing provisions that prohibit the outsourcer from making such purchases on their client’s behalf. Are all licenses “legal”?
2.    Outsourcers are sometimes required to “carry” their clients on their own system.
3.    The outsourcer and its successors must be a formally designated agent for the client in order to make such purchases and adjustments.
4.    Maintenance and security certificate administration can be tied to hardware ownership and original purchase.
5.    Legacy issues associated with previous outsourcer.

Software licensing issues are often affected by a number of factors. The five items listed above can affect the client and the outsourcer in the following ways.
1.    Some software and hardware providers do not allow for the third party procurement of their products on behalf of their client and can be negotiated out of a license or maintenance agreement, but not always.  The end result is that warranty and maintenance terms can be voided, on the accounting software system or other software package.
2.    Compliance issues can also arise out of creative licensing solutions.  On occasion, the outsourcer may offer to “carry” the client on it’s own licensing and maintenance agreements.  Buyers beware, few if any; software companies would find this acceptable.
3.    Some software and hardware maintenance providers require that the outsourcer become a formally designated agent for the client in order to purchase software and/or enter into maintenance or software agreements on a client’s behalf.  This often involves a formal process and paperwork without which licensing compliance is null and void.
4.    Security certificates used on an Internet site may have originally been purchased directly by the client, often resulting in the need to re-purchase the certificates to keep the website up and running.
5.    Additional monies (as high as 20%) should be put aside in the transition budget to deal with purchasing compliance holes. Watchdog groups find transition time to be a great opportunity for auditing an organization.

Despite all the headaches associated with outsourcing and transitioning between administration providers, for the provider and for the client, it has proven a viable and cost effective alternative to maintaining an internal IT department for some organizations and a moneymaking proposition for the providers worldwide.

Written by :

alr857