9. Potential Outsourcing

9. Potential Outsourcing

In today's business environment, many licensees will desire to have a third party outsourcing partner provide some or all of its information technology operations. In particular, the licensee may desire to have a third party host and provide access to a software application. If outsourcing is currently or will be a possibility in the foreseeable future, the licensee should include a specific right to outsource in the license agreement. Raising this issue early with the vendor and ensuring that it is addressed in the agreement will avoid later disputes and potential additional fees. The following is an example of such an outsourcing provision:

Example Provision:

26. Outsourcing and Customer's Designee.

    • 26.1 Customer's Designee. Any third party outsourcing vendor, contractor, agent, or other person or entity designated by Customer in writing (the "Customer Designee") shall be entitled to enforce and/or perform any responsibilities, obligations, or other provisions attributed to Customer under this Agreement. Customer shall provide the Vendor with written notice of the Customer Designee, including, the general scope and nature of the authority of the Customer Designee (the "Designee Authority Letter").

    • 26.2 Vendor Cooperation. Vendor shall fully cooperate, communicate, coordinate with, and respond to all the requests of the Customer Designee within the general scope and nature of the authority of the Customer Designee. Such cooperation will include Vendor's participation at meetings with such other vendor(s) covering technical, operational or planning matters relating to Vendor's services and such other vendor's services.

    • 26.3 Approvals. Vendor shall be entitled to reasonably rely on the Customer Designee, provided, however, that Customer Approval shall be required for any work effort requested by a Customer Designee that is reasonably anticipated to result in fees and/or expenses not already documented in the Agreement. Customer shall be entitled to amend and/or terminate its use of the Customer Designee at any time upon advance notice to Vendor. Customer will require each Customer Designee to enter into an agreement containing appropriate confidentiality and non-use provisions with respect to Vendor Confidential Information. Customer shall remain responsible to Vendor for any and all performance required under this Agreement by Customer.

    • 26.4 Existing or Successor Outsourcer. For purposes of this Agreement, XYZ Corporation ("Outsourcer") shall be a Customer Designee. The general scope and nature of the authority of Outsourcer with regard to Vendor includes the following:

      1. work with Customer to plan the scope, requirements and specifications for any particular project or engagement;

      2. assume responsibility for properly fulfilling Customer's operational, Management, and administrative obligations under any agreement with Vendor;

      3. working with Customer to identify its business needs and assuming primary responsibility for incorporating those business needs in the design and development of specifications for the Vendor's services;

      4. act as Customer's limited agent and coordinate the implementation of Vendor projects and performance;

      5. assume responsibility for managing the relationship and monitoring Vendor's continuing performance under the terms of this Agreement and bring all performance issues under the applicable service levels to resolution in accordance with the terms of this Agreement, including but not limited to oversight of Vendor's development and implementation of corrective action plans;

      6. monitor Vendor's continuing timeliness of performance under the terms of this Agreement;

      7. monitor and assess Vendor's ability to efficiently and effectively deliver the agreed services under the terms of this Agreement ; and

      8. review and verify the accuracy and compliance with the terms of this Agreement by Vendor. Customer may, in its sole discretion, elect to outsource its remaining, non-financial obligations as to the operation of all or any portion of the Licensed Software.

There shall be no additional license fees, transfer fees, or other fees paid by Customer to Vendor in connection with any outsourcing election hereunder, regardless of any site or CPU transfer(s). Any such outsourcing vendor(s) shall agree to comply with the confidentiality provisions of this Agreement.