Getting To Bottom
Don't know about you, but I've always been fascinated by
implications and intentions. As a kid I got a great kick
from the tag line "facial quality" toilet tissue. What did
someone have in mind? I expose my face to windswept, sub-
zero temperatures while skiing; blistering, 110 degree
temperatures while in the boating; and to daily abrasion
of the epidermal layer while shaving. Is "facial quality"
suppose to mean "delicate" or "soft"? Glory, there must be a
better way to get it said..... Certainly, "hemorrhoidal
quality" leaves no doubt.
Having gotten to the bottom of matters, so to speak, I'd
like to refocus attention on another bottom: The Bottom
Line.... getting a signature on a software contract; and the
delicate art of drafting an unambiguous agreement that helps
to do so.
Before unbundling in l969, there were no software con-
tract -- just hardware -- 'cause software came free. Since
then, however, software has ceased being the step-child of
the hardware industry. Today, its developed and marketed
independently and contracted for separately under its own
legal agreement. And as more software is relied upon by
businesses -- both developers of it and users of it -- the
terms and conditions under which it is licensed/sold becomes
more critical. Typically, there has been a tendency to
delegate the development of this document to lawyers. But,
Just what is the nature of a software contract.... mere-
ly a legal document, or is it much more?
IT'S MUCH MORE. In fact, I contend that a software
contract should be the finest marketing piece any company
has. For indeed, it is the Bottom Line, representing not
only the product, but the company. It may not be "glossy",
but the contract should be the shining example of the style
and fashion by which the company choses to do business.
THAT'S MARKETINGS DOMAIN. Consequently, the tendancy to
solely delegate its development to lawyers should be checked.
The way I see it, when considering contracts, the legal
function is like that of a semi-permeable membrane that
allows the inflow of cash to the corporate coffers, but
prevent its unanticipated (often catastrophic) outflow once
it has been collected (see inset). This simplistic model
isn't to diminish its function.... just put it into
You see there is a dichotomy.
Marketers, the workerbees with quota pressures, are dual
focused: Move product and generate revenue. They want to
maximize the offer in knowledge of the truism," the better
the offer, the better chance for success". How can you fault
Lawyers, the watchdogs of the treasury, on the other
hand, are focused on conservation. They have a penchant for
placing limitations in knowledge of the truism, "the less
that is offered, the less that is risked". How can you fault
And yet both serve a very vital function in the checks
and balances in a corporation's finacial survival.
You might be thinking that the no lose position in this
dilemma is the treasurer's office with one side gathering
money and the other guarding its retention. But that's not
the case either. The treasury, and therefore the entire
corporate goal achievment -- not just in revenue but the
various implementations which revenue buys -- can best be
accomplished if the contract is balanced to maximize the
product/company offer against minimized risks. In short
the legal instrument should be powerful enough to attract
revenue worded to prevent disasterous outfows.
E-V-E-R-Y-O-N-E should be concerned about contract con-
tent. But oh my, how few are.
In reality, there are two aspects to software contracts:
Legal and Marketing. A little parallelism will help to
I think that it is safe to say that when addressing the
legal aspects, a major concern has to be for the body of law
which is still evolving regarding this new technology. Since
it's illegal to have a contract clause that is in contraven-
tion of the law, the real homework is to know the law for
every jurisdiction that your contract's terms and conditions
will be construed by. Copyrights, trademarks, & trade sec-
crets; fitness of use; direct/indirect loss; confidentiality;
states of interpretation; assignment; valid/invalid disclaim-
ers; indemnification; etc. That's the Lawyer's job!
I also think that it is safe to say that when addressing
the marketing aspects, a major concern has to be for the
body of law which hopefully will grow from acceptance of
your new technology. And again, since it's illogical to have
a contract clause that is in contravention of marketing
precepts, the real homework is to know the tactics and
strategies that will distinguish your company and product
from competition wherever it goes. Meaningful warranties;
upgrade provisions; maintenance and updates; education,
support and users' group; billing procedures; escrows for
source; and most important of all.....grant of license.
That's the Marketer's job!
Perchance, you think that I'm all wet on the grant of
license. Not so!
The license is legal, allright; but the granting is pure
marketing: How'd ya like it? By site; by CPU; by attached
processor; by multiple processor; by clusters or networked;
perpetual or limited term; exclusive or non-exclusive; trans-
ferrable or non-transferrable; etc.
I can't tell which law schools are responsible for which
type of lawyers, but I can tell you that from my experience
in negotiating hundreds of contracts with corporate lawyers
and law firms representing corporations that there definitely
are two schools of thought. The School of Say-Little and the
School of Say-A-Lot. Both manifest their legal cultures
thoughout a corporation.....including marketing.
It seems that Say-Little believes in court interpre-
tation, perhaps believing that reasonable wo/men will avoid
getting there, if the time ever comes. Kind of like, where no
agreement exists -- no agreement can be broken. Say-A-Lot
likes specifics; defines words; and even includes remedies
within the contract as if to believe in the saying that
horrible endings are better than horrors without ending.
Say-Little chides Say-A-Lot stating that you can't
define everything, besides an omission can work against you
if you have taken pains to define most. Say-A-Lot counters
with a the "ounce of prevention....etc." idea, stating that
the heavy one-time investment in drafting make everything
smoother in difficult times.
Why all this? Simply because from a legal standpoint
both sides have their merits. But from a competitive
marketing point of view, the reticence of Say-Little can be
very dangerous, while Say-A-Lot can provide one of the finest
closing documents a company can have, if marketing joins in .
So what is your intention? Let the prospect/customer
know how you intend to conduct business; and what the
implcations of the terms and conditions are. Today, if they
are less than anything to write home and tell momma about,
you'ld better reassess you position.
Here's a sweetheart paragraph that crossed my desk
the other day.
"In the event.......the most current version fails to
perform in accordance with the most current Documentation
(A Documentation Non-Conformity), The Company shall use it best
efforts to correct such Documentation Non-Conformity".
Well Ladies and Gents, what's it goin' to be? Change
the product to reflect the documentation by which most no
buyers no doubt based their decisions; or, change the docu-
mentation to match the product as if the product spontan-
eously combusted on it own genius?
Based on the adjective before Non-Conformity, one could
get the very sick feeling that what one saw was not quite
what one was about to get.
This isn't filling anyone wants or needs; this is a
legal shell game. And it's true marketing Hemlock.
If your agreements waffle, it's time for review.
Finally, let's don't get confused. I'm no lawyer and
make no representation that what you have read is anything
but emperical marketing savvy. So check it out with Counsel.
Rather than savvy s/he may shout insanity. But then again,
before you fold your marketing tent, look to see how many ICP
Million Dollar(s) Awards are next to their degree..... Get