IDII Software Newsletter
January 26th 2008 - Volume 9 Number 1
For PROFESSIONALS in Software for Warehousing, Logistics, and Supply Chain.
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Understanding Software Contracts Process - Part 2

9. Source code escrow - Protects the user against a vendor that is unable or unwilling to maintain the software by providing the terms under which source code and documentation will be released to the user with an independent third party acting as the escrow agent.

10. Scope of license - Specifies all rights, including the right to use the software for its intended purpose, keep duplicate copies, modify the source code, use software on a backup or duplicate CPU, make copies for training purposes, and assign the contract to a subsidiary or subcontractor. Special consideration should be given if there are any third-party logistics operations or other outside warehouse service providers. Vendors will typically license by number of users, by each site, or as a corporate license (unlimited users/sites). They may also implement a sliding scale – so much per user up to a certain number, then another fee level beyond that, etc. Understand that there is an important distinction between “named users” and “concurrent users” – where “named users” are individual log-in IDs and “concurrent users” are a certain number of users that would be logged into the application suite at one point in time. “Concurrent users” tends to be a better metric of actual planned activity for the application.

11. Termination of agreement - Gives the user and vendor prior notice (specify number of days) of alleged default, and allows the opportunity to correct the default condition. Be aware of vendor clauses to reclaim hardware or software, or to lock software.

12. Dispute resolution - Includes a provision to use the software while a dispute is being resolved, and specifies the location (state) of dispute resolution. The user may wish to include a mandatory, non-binding, pre-litigation mediation provision to save parties from unnecessary litigation; this allows parties to retain an arbitrator to assist with resolution.

13. Confidentiality - Defines confidential information. Users should attempt to negotiate provisions to protect their own confidential information (“restraint of trade” issues make vendor restrictions difficult) and examine and streamline language that protects the vendor’s confidential information where possible.

14. Patent and copyright indemnity
- Indemnifies the user against third-party suits related to patent, copyright, trade secret, or trademark infringement. This means the vendor will protect or insure against any user liability stemming from those infringements.

15. Risk of loss - Passes the risk from vendor to user after software or hardware is delivered to user premises (not to carrier) and specifies damages if the loss of hardware or software affects or interrupts business.

16. Insurance - Defines expectations as to what types of insurance the vendor is expected to carry and requests a copy of the insurance certificates.

17. Solicitation - Defines restrictions around solicitations for employment of each party’s employees.

Customizations

It is important for prospective purchasers to remember that a vendor’s product may need to be customized. Customized software also requires an agreement with user provisions, including:

• Payment mechanisms.
• Changes to scope.
• Progress reports.
• Project organization.
• Software ownership.

These provisions will protect the user’s interests and create a fair and equitable agreement.

The Risks


There are several risks involved with software licensing. These include non-performance, cost of modification or integration, vendor bankruptcy, and infringement. To minimize these risks, a prospective buyer may want to enlist the aid of a third party. The third party should be well versed in supply chain technology and have the business perspective and technical expertise to assist with the contract negotiation process. Once enlisted, the third party can ensure proper legal assistance is retained and help identify client issues related to contracts, such as provisions to be changed, deleted, or included, and risks inherent in the agreement.

Conclusion

Software licensing contracts are complex and confusing. Prospective purchasers who are prepared and know their rights in the negotiation process can reach an agreement with provisions that protect their interests without minimizing the vendor’s rights. Suitable legal counsel should review software contracts, as these purchases are very different than other types of business contracts. Ensure counsel has the appropriate experience to support the software purchasing process. Making informed, educated decisions will enable all parties to come away from the table as winners.

This white paper is also located at http://www.idii.com/wp/KsaSoftwareContractsArticle.pdf By John Seidl and Lori Cox of Kurt Salmon Associates (KSA) - Visit http://www.getgoalpost.com or e-mail John Seidl at jseidl@kurtsalmon.com and Lori Cox lpcox@kurtsalmon.com

EXCITING RESOURCES

Supply Chain Book Directory - Rapidly find books on 30 topics.spanning Warehouse Management or Inventory Management or Facility Planning & Layout or Software & Technology or RFID or WMS or MRP or Metrics-KPIs-Dashboards or Global Procurement and more!

IDII News

Selecting Warehouse Software from WMS and ERP Providers - Best Warehouse Management System book to guide you through the process NEW EXPANDED SECOND Edition "Selecting Warehouse Software from WMS and ERP Providers - Expanded Edition" New content in all areas plus new detailed implementation chapter. 205 pages. $125 USD.
Premier List of Warehouse Management System software with WCS, slotting, load building, YMS, and LMS software NEW... "Premier List of Warehousing Software" is out! Publication has both the exhaustive world-wide listings of WMS, WCS, LMS, YMS, Slotting, Load Optimization software solutions and includes WMS short lists. 55 pages. $49.95 USD.
Integral Warehouse Management covers WMS aka Warehouse Management Systems 2007 - NEW - "Integral Warehousing Software" - Reviewed by IDII in a recent newsletter. This excellent warehousing book spans the tough spectrum of technology, inventory, and worker motivation. 252 pages. $44.95 USD. Thought provoking!

New White Papers   - White Paper Index -Suggest A White Paper

enVista white paper on WMS Testing called "Building a Winning WMS Testing Strategy" - Informative!

enVista white paper on Picking called "Efficiency Gained with Continuous Batch Picking" - Thought Provoking!

Technology & Software Product News

Cadre Technologies has released a new version of Cadence Mobile Logistics (CML), its Microsoft Windows-based radio frequency system that is part of the Cadence Fulfillment software suite. This new logistics software integrates a variety of new, technologically advanced features that enable warehouse workers to update inventory in real-time and increase productivity. CML is enhanced by several new features that further streamline the data capture process.

-- Supports the "catch weight" of products being shipped, an important feature for a warehouse management system in the food industry, which requires this information during receiving and picking.

-- Supports "pick and pass," also known as zone picking, whereby one warehouse worker stays in a zone to complete the lines of an order specific to that zone and passes the order, via a conveyor belt or cart, to another zone to be processed by a different picker working in that zone.

-- Allows manual lot substitutions managed by business rules. For example, if a worker is asked to pick a product from a lot located at the back of a warehouse location, he or she can choose to pick the product from another lot in front as long as it conforms to rules such as expiration dates and does not break a set rule prohibiting the lot change.

-- Lets managers assign work groups through a module called "Team Assignment." This aspect of the order management software is important for designating workers assigned to a large account with customized warehouse needs, thus increasing quality and productivity.


Datex International, announces the latest release of their Warehouse Management System – FootPrint – during its 30th anniversary year. The company plans to celebrate a couple of accomplishments this year that depict who Datex is as a company. Innovative, as represented by the release of the new WMS, and stable, as demonstrated by the 30th anniversary of the company; these two themes drive the company message this year.

FootPrint is the new version of the company’s Warehouse Management System created using Microsoft .NET. The .NET framework underlies most new applications created for the Windows platform and illustrates Datex’s commitment to continuously providing their customers with the most current technology. FootPrint includes all the functionality provided in the previous version of the software along with new features such as container tracking, BOL signature capture, image capture, voice recognition, yard management system and ad hoc reporting. Additionally, the systems standard features include lot control, pallet tracking, catch weight, system-directed tasks, complete inbound and outbound operations, EDI capabilities, multiple stock rotations, and full reporting capabilities.


Microsoft seeks patent for office 'spy' software. Microsoft is within 12 months of having a patent approved for spying on office workers - what they are doing, performance, and behavior. Is Microsoft the Big Brother or just an enabler to Big Brother? See http://technology.timesonline.co.uk/tol/news/tech_and_web/article3193480.ece for the full article.


KNAPP, implemented the innovative KiSoft electronic pick list at PLUS and Zielpunkt in Vienna.
The KiSoft Warehouse Management System (WMS) already manages over 12 distribution centres for PLUS in Germany, Romania, Greece, Czech Republic, Hungary, and now in Vienna. The KiSoft WMS was implemented within a few days at the distribution center in Vienna and successfully replaced their existing Pick-by-Voice system. The KiSoft electronic pick list was developed in close collaboration between PLUS and KNAPP and has proved its worth in over 1,000 commercial logistic installations. PLUS reaches higher performance and quality values with the electronic pick list than with their previous Pick-by-Voice technology. The user guidance frees the hands and leads with clearly arranged schedules for increased performance. PLUS belongs to the Tengelmann international group of companies and is represented in Europe by more than 4,000 branch stores and around 42,300 employees.


Singapore APL has ocean-capable 53' containers. Good cost savings in comparison to 40' containers. See http://www.dcvelocity.com/news/?article_id=1587 for details.


SmartTurn Inc., announced today its Series A financing led by New Enterprise Associates (NEA) and Emergence Capital Partners. The $5 million capital will be used to strengthen and accelerate development and new customer acquisition initiatives.

Scripture to Ponder - List of Scriptures to Ponder from prior issues.

"Have you not put a hedge around him and his household and everything he has? You have blessed the work of his hands, so that his flocks and herds are spread throughout the land." - Job 1:10

Famous Quotes to Ponder - List of Quotes to Ponder from prior issues.

"All I can say about life is, Oh God, enjoy it!" - Bob Newhart

Websites To Check Out

Professor Randy Pausch's Last Lecture - Inspiring! http://www2.oprah.com:80/health/oz/oz_20071022_350_106.jhtml?promocode=HP23



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