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State of California COTS Discussion

State of California COTS Discussion. Category #5 Warranty and Maintenance Presented by Ann Shook, Director State and Local Govt Western Division, EMC September 24, 2007. FINDING COMMON GROUND: SEC Requirements, Corporate Liability Limits and State of California Risk Mitigation.

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State of California COTS Discussion

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  1. State of California COTS Discussion Category #5 Warranty and Maintenance Presented by Ann Shook, Director State and Local Govt Western Division, EMC September 24, 2007

  2. FINDING COMMON GROUND:SEC Requirements, Corporate Liability Limits and State of California Risk Mitigation

  3. Defining Vendor Responsibilities and Liabilities • Language that is Unacceptable to EMC’s Corporate Legal Counsel w/respect to Contract Terms and Conditions: • “Unlimited” • “Forever” • “Open-Ended” • “Uncapped” Sample Words Indicative of “Betting the Corporation” on a project--these words prevent us from defining responsibilities and liabilities Standard terminology defines responsibility by performance measures and dates and liability proportionate to potential profit

  4. Considerations • Revenue Recognition—Public Corporations have a responsibility to Shareholders to show a return on investment. Transferring software licenses in such a way that revenue cannot be recognized is not in line with our corporate goals; many other large brand name corporations have the same responsibility. • We recognize there are a few corporations which do accept terms negatively affecting revenue recognition; however, these corporations typically have goals toward: A) outsourcing of state projects which include large amounts of service dollars and a maximum of project control, B) selling software as a service to create mandatory renewals and upgrades vs. the “perpetual license” and/or C) these corporations may have their own credit organizations giving them an ability to create a financing within a contract. • Affect on Small Businesses/DVBE’s and their ability to capitalize properly (revenue recognition) and operate smoothly (Cash Flow) • Affect on Integrators without access to credit corporations

  5. State’s Standard Maintenance and Warranty Language as a Standard Acceptable to EMC within the boundaries of our ability to negotiate certain language to refine to our standard offers We don’t have the staff to manage a large variety of warranties for one product due to the large number of products and subsidiaries of EMC We may not be able to guarantee performance to dictated terms due to the large number of individuals which may be involved in the agreement (exception for agreed upon response times dictated by project requirements, but limited as to guarantee of resolution times)

  6. WHY BALANCED TERMS AND CONDITIONS ARE SO IMPORTANT

  7. Maximizing RFP Responses • Limiting terminology decreases the number of bidders, thereby limiting the number of explored options and potentially increasing the probability of failure • A willingness to accept bidders and negotiate business terms will: A) allow the State to examine all offered solutions and B) help the State quantify and document the cost of nonstandard responsibility and liability language.

  8. Questions Contact Information Ann Shook Shook_Ann@emc.com (916) 730-6958

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