Deutsche Post DHL develops software contract models to reduce costs


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Deutsche Post DHL has created contract templates to manage software costs in an increasingly complex global operation.

With more than 480,000 employees, its global footprint is larger than that of most major IT vendors, yet when it comes to software contracts, even an organization the size of Deutsche Post DHL must exercise caution.

Kamal Patheja, Global Licensing Legal Director at Deutsche Post DHL, worked as an IT lawyer for 20 years and at Deutsche Post DHL for almost 14 years.

Three years ago, she assumed responsibility for licensing at Deutsche Post DHL Group, a role created to deal with the growing complexity of software licensing.

“There’s no point in having a document with convoluted terminology that no one understands. Keep it very simple,” she says. “I prefer plain English and one-syllable words. A software contract should reflect the needs of the business.”

Patheja says “legal” shouldn’t be treated as a checkout exercise.

She warned delegates attending the Gartner IT Financial, Procurement & Asset Management Summit in London that if the legal department is not used in the right way, contracts may contain hidden terms that could affect software use and performance. ability of the business to operate effectively.

Develop software contract models to meet the needs of the entire company

Patheja and her colleague Cathy Hamilton, IT License Application Manager at Deutsche Post DHL, gave a presentation at the event, describing how they worked together to ensure the best interests of the company are reflected in the software contracts.

Patheja is involved in contract negotiations from the start and works alongside Hamilton and IT procurement to negotiate software contracts that meet Deutsche Post DHL usage requirements.

If you don’t get the software license agreement early on, you will run into problems later.

Cathy Hamilton, Deutsche Post DHL

“We see the evolution of software in a contractual way, where the focus is more on compliance by vendors, who take a closer look at how users actually use the software,” she says.

At Deutsche Post DHL, there is a constant need to take a closer look at contracts to ensure the business is protected from a compliance standpoint, she says.

“As an organization, we need to know what we should be doing and what we shouldn’t be doing,” she says. “We must ensure that the wording of the contract does not inadvertently restrict the use of the software for its intended use.”

A vendor can prevent the company from using the software in a particular way, such as site licenses or unlimited license agreements, which can limit site movements when consolidating data centers.

“Either the contract does not have a specific requirement, or it prohibits something, or it is silent. It is difficult to find provisions that are not covered in a contract,” says Patheja.

The model, which was developed by the Legal, IT and Enterprise department, focuses on identifying and customizing contract terms for Deutsche Post DHL to reflect how it may wish to use the software, ranging from legal jurisdiction and assignment to offshore use, outsourcing and audit rights.

“The license conditions set the conditions that will allow Deutsche Post DHL’s technical environment to provide a checklist to our lawyers when we need a particular clause to give flexibility to the company,” said Patheja.

The company sets the agenda for software audits and, if possible, defines the audit process in the contract, even specifying a blackout period during peak hours.

It seeks to agree on the scope and frequency of audits and aims to write in the contract that any license shortfall would be filled at the contract price rather than the list price. An escalation process is also included, if Deutsche Post DHL does not agree with the result of a software audit.

But Patheja stresses that he’s not trying to get away with the software publisher’s intellectual property, he’s just waiting for a “fair and just contract.”

She says she’s trying to figure out why the software company wants a particular provision in the contract. “Sometimes the supplier is trying to solve a particular problem, and that’s why a face-to-face meeting is helpful. We can collaborate and find something that works for Deutsche Post DHL and that works for the supplier,” explains Patheja.

Cost control

Hamilton is focused on controlling supplier costs. “Software license agreements are different from buying other things,” she says. “The quality of the commercial agreement depends on the language of the software license agreement. If this is not correct, you may end up with many challenges, when you find that your project’s use of the software is different. of what is written in the contact. “

If the contract contains ambiguous terminology, which the supplier does not clarify, “you have to be concerned about how it’s going to play out in the future,” Hamilton warns. “If you don’t get the software license agreement early on, you’ll run into problems later. “

She says legal models are not forced on providers. Instead, Deutsche Post DHL hopes to work with the vendor, to make sure the software contract covers their concerns. The specifics of outsourcing or divestiture may not be decisive for the supplier, but they are fundamental to the way Deutsche Post DHL runs its business. The legal model gives Deutsche Post DHL a basis to assess and potentially identify missing clauses in the supplier’s contract.

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