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This article is from the Summer 2007 issue of Hospitality Upgrade magazine.To view more articles covering technology for the hospitality industry please visit the Hospitality Upgrade Web site or to request a free publication please call (678) 802-5307 or e-mail. | |
By Raymond M. Asad, HRA. MBA.
Technology business contracts and negotiations can be challenging to meet all the needs of the buyer and the provider. The goal is to have a win-win situation where all parties involved clearly know and understand their responsibilities, long-term objectives and business circumstances. It is important to keep in mind that the success of your technology provider or supplier and their longevity in the market place will ensure your long-term support and success. Thus, negotiate with fairness by knowing the market and understanding the competitive arena. Whether you are purchasing a new property management system for one property or several thousands properties, or purchasing GDS services, a CRM system, or a new key lock system all will require a legally binding contract of purchase and services. It is crucial to have a deep understanding of your business objectives, circumstances and current situation financially and strategically before signing. Also equally as important is that your team and internal management supports and shares the objectives and strategy. Most contracts contain three or four components, sometimes more depending on the suite of products being purchased or the number of core third-party interfaced products. There is the overall master agreement which contains all the terminology and definitions. It contains what is being purchased, what services are being provided, pricing, responsibilities, warranties, software licensing and other clauses that should cover everything you can think of. This is also the place where everything to meet your business and technology strategy and situation should be included and expressly written. Depending on the physical location of the software being licensed will be delivered and reside will have an impact on taxes. If it is local to your property then local taxes will apply. If it is in a remote hosting location, then taxes will be based on the remote location tax rate. Two other contract common components are the service level agreement(SLA) and statement of work(SOW). It is imperative that the content of these two sub-agreements are not contradictory to the master agreement. The SLA provides service level standards and performance measurements by the vendor. The SLA contains more customer responsibilities as it did in the master agreement, so make certain to review all the customer responsibilities and that all can be met. Remember that the SLA promises are contingent upon meeting your responsibilities as well. If you are considering a purchase of a suite of products which are implemented at different times, review the support fee schedule and when support fees for which components are due. Support fees should only be charged on installed components. Also, make sure to leave room open for renegotiating support fees on an annual basis depending on performance to the SLA, or perhaps growth of your organization. The SOW should clearly detail every action to be completed by the vendor with an acceptable timeline. Again, review the responsibilities stated in this agreement for both parties and make sure that 1) You are able to fulfill your share of responsibilities. 2) That there are no contradictory statements to any of the other two agreements. Often times hardware specifications are provided within this section by the vendor. Make certain that these specs are sourceable from various providers and allow for technological changes and phase outs Tip: In addition to remedies, contingency plans should also be included and agreed on in the SOW. Also, try to engage non-technical team members to look at the business operations angle. Operation members are very keen on their day to day needs and can be of great assistance in making certain the technology meets daily business needs. The majority of the challenges that you�ll encounter will tend to be in the following different areas:
© Hospitality Upgrade, 2007. No reproduction or transmission without written permission. |
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Managing Editor Hospitality Upgrade magazine and the Hospitality Upgrade.com website http://www.hospitalityupgrade.com [email protected] |
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