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Do the Deal

Being as how "Shop Talk" is about buying rather than building software, I thought it was time we talked about . . . buying software. There are a few simple but important questions that need to be cons

By George Grieve | Updated on September 30, 2008

Being as how “Shop Talk” is about buying rather than building software, I thought it was time we talked about . . . buying software. There are a few simple but important questions that need to be considered during the negotiation and purchase phase of a software acquisition. These questions include: What do you get, what does it cost, when do you pay, and what is your fallback if something goes wrong? These questions are ultimately answered by terms and conditions recorded in legally binding agreements. Before we consider each of these questions, let’s refresh our memory as to what comprises the overall transaction.

Usually, when a carrier purchases a core insurance processing system, say, a policy, claims, or billing system, from a vendor, it actually is buying three things: software, ongoing support for the software, and some services aimed at getting the software successfully installed and up and running. Of course, the carrier also may buy outsourcing and other services, such as rate, rule, and forms maintenance. So, at minimum, the carrier usually has to understand and reach agreement on the terms and conditions for three contracts: a software license agreement, a software maintenance agreement, and a professional or consulting services agreement.

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