Do Your Software Contracts Permit External Use?

Many IT sourcing managers are facing unexpected additional software costs because they have used their enterprise systems to work more closely with third parties, only to find that their license agreements include unreasonable extra charges for, or even prohibition of, such access. Standard contract terms grant access rights for internal use — by employees and contractors — but that is rarely sufficient. Today's business technology (BT) systems, even if they are primarily internally focused, now also support external users, either directly or indirectly, such as customers, channel partners, suppliers, and end consumers. Yet software publishers have failed to adopt a consistent approach to such common situations. These BT usage scenarios may represent extra value that the customer is obtaining from the software, in which case it's fair and reasonable for vendors to charge a bit more, but the IT buyer's problem is that few vendors have a fair mechanism for doing so. Sourcing managers should ensure that their software contracts permit essential external use for a reasonable and proportionate cost and take steps to prevent third-party access until they have done that.