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The importance of IT contracts

Online sales are becoming ever more important to all retailers, and the fashion industry is no exception.

Law

 

In the rush to grow online sales, it can be easy to overlook the IT contracts underpinning e-commerce. Just as a retailer needs to know their tenancy rights when leasing a high street premises from a landlord, they also need to be clear on their rights when dealing with IT providers responsible for problems with their online store. All too often retailers are exposed to unnecessary risks because of inadequate contracts for delivery of their e-commerce operations.

There are plenty of questions to ask in the procurement process that retailers need to consider when making sure that their IT contracts provide good value. These include:

  • When contracting for a whole new e-commerce set-up, are you paying a fixed fee for a promised outcome, for example a working store, or for the hours that your provider works? If the latter, then what controls have you put in place to control mounting costs associated with ‘mission creep’?

  • Have you considered how far the complexity of the solution you choose locks you into a particular supplier? Do you know if your software licences allow you to engage companies other than the software provider to perform support and maintenance? If not, you risk being left without support if you choose not to keep your software upgraded with the same supplier.

  • Are you clear where service boundaries lie in a potentially complex system of contracts supporting your online store. Some providers try to draw the line in the wrong place, or are vague as to where the line is, looking to pass their proper responsibility for faults onto others.

  • If the website goes down for a lengthy period, do the damages you can claim provide adequate compensation for the losses you will suffer? Often suppliers will make service credits an ‘exclusive remedy’. This might mean that you get a small, perhaps 10% of monthly charges, credit against a future invoice because of a major outage over a key period.

  • If you use international suppliers, do their help desk and support hours align with when your business will need support? Does their maintenance windows mean they might take your site offline during peak hours for sales in the UK?

  • What is the weakest link in the chain? If you have gone to great lengths to have robust data security arrangements with your customer relationship management (CRM) software provider you should be careful not to undo if another part of your online store that can access data in the CRM does not offer similar protections.

Retailers need to make sure that they have properly looked into their IT contract, or risk potentially damaging their bottom line and brand reputation.

For more information please contact Ed Hayes on 0333 006 0534 / Ed.Hayes@TLTsolicitors.com.

Visit www.TLTsolicitors.com

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