Section Three: Selecting a Client/Server System
Contractual Issues

Depending on your institution and the size and nature of your purchase, no contract may be required, or there may be a purchase contract and a maintenance contract. For expensive projects, where expense includes not just the purchase itself but the staffing and training required for deployment, a purchase contract is a good idea. A purchase contract can provide the following benefits:

Financial and Risk Protection
If the contract includes innovations not yet available, the purchase contract can outline staggered payments for scheduled deliverables. The contract can also define financial performance incentives for functionalities that are very new or that do not perform as specified, particularly if you select a vendor for very good reasons in spite of concerns expressed in reference checks about the performance of certain functionalities or problems with ongoing troubleshooting and support. Most vendors have an honest desire to serve customers well, but they are frequently understaffed and focused more on generating new business than on support for existing customers. Financial incentives (also known as financial penalties, when the vendor steps out of the room!) are an effective way to insure service and minimize risk, particularly for very new technologies. Vendors are more likely to agree to financial incentives for performance for large, expensive projects and for projects that will be heavily promoted by the purchasing institution.

For government entities, which of course includes state universities, financial penalties can be tricky but not impossible. Steep reductions in ongoing maintenance costs, free extension of the warranty period, payment in free enhancements, free additional streams, etc. can usually be worked out with your contracts department as well as with the vendor. The goal is to avoid enriching the coffers of your institution's "general fund," which might go toward the purchase of uniforms for the football team, and instead to impose performance penalties that directly compensate your digital video implementation.

Financial protection can and should include price caps for ongoing maintenance and should, if at all possible, lock in prices for enhancements that are part of the purchasing instrument response, and thus the contract, but not yet available for purchase.

Upgrades and Enhancements
A contract is a good place to negotiate for functionalities requested in the purchasing instrument which the vendor is willing to develop but unable to currently supply. Before purchasing a digital video client/server system, be sure to identify, possibly through a non-disclosure agreement, any anticipated enhancements scheduled for release in the next six to fourteen months. If you include any planned enhancements in the purchase contract, be sure to minimize the risk to you contractually. Many vendors offer ongoing maintenance plans that include software-based enhancements. Knowing the vendor's development plans will help you determine the value of a combined maintenance/upgrade plan.

Be careful in a contract to negotiate only for enhancements to current functionalities that would benefit a range of users, such as a MacOS client, for example, and not replacement functionality that would result in the purchase of a non-standard current product. You do not want to risk ongoing problems with new releases and upgrades that will not interoperate with your nonstandard product. If current functionality requires re-working to customize service for your institution, you are probably buying the wrong product. Obviously, very large institutions, such as government entities and consortia, will have better success negotiating functionality upgrades for existing products. If a vendor meets your needs in most areas but lacks one or more key requirements, consider developing a consortial purchase arrangement with other institutions with similar needs.

If you identify a significant enhancement to service that you contract with the vendor to develop, be sure to use the purchase contract or another contract instrument to spell out the specifications and the financial incentives for completion. If your institution's involvement in designing and testing the enhancement will be significant, consider a joint marketing venture, or at least a substantial innovator's discount for the purchase and ongoing maintenance of the enhancement. Make sure all joint venture or pricing arrangements are clearly established in the contract.