A RISK ASSESSMENT BEFORE
MAY PREVENT LITIGATION AFTER

26 December 2001

When involved with IT projects, more and more companies are finding themselves heading to court. And, ironically, the litigation of software disputes often takes longer than the original schedules for the projects!

In a recent Council Opinion of the Cutter Business Technology Trends Council, Council Fellow Tim Lister writes that software disputes have increased fivefold in the past 25 years and the situation will only get worse in the years ahead. "Litigation is becoming a more common lifecycle phase," says Lister. "It will continue to grow and become a major financial sinkhole until the IT industry reexamines its posture on contracts involving package purchase, contract development, subcontracting, and outsourcing."

According to the Council, one of the best ways to avoid a contract dispute and litigation is to do a formal risk assessment before the project starts. "Do not do this with your organization alone, conduct the assessment with the finalists for the job," says Lister. "Apart from obtaining a mutual understanding of the complexities of the job, you will gain valuable insight into the management style and culture of your future partner."

The Council also recommends the following actions:

• The contract needs to be the responsibility of IT, not the legal department.
  
  
• Build regular contract reviews right into the original contract.
  
  
• Build measurable, quality-gated progress points into the contract.
  
  
• Consider a clause that calls for all parties to lock in key personnel for key periods of work.
  
  

"Litigation in any form is time-consuming and expensive," concludes Lister. "It diverts resources from the work, and it is enervating and demoralizing. IT organizations cannot afford to leave contracts to lawyers. The complexity of the relationships demands not just the letter of the law, but the spirit of the deal."

--Cutter Consortium

[These statistics were taken from Cutter Consortium's Business Technology Trends and Impacts Advisory Service. For more information, please contact Dennis Crowley at +1 781 641 5125 or +1 800 964 5125 or e-mail dcrowley@cutter.com or visit http://www.cutter.com/consortium/index_trends.html.]