Doing Business in Style

IT PROJECTS IN THE RETAIL SECTOR – KEY LEGAL TIPS TO UNDERPIN SUCCESS

  1. Ideally, you should treat the supply contract as an integral step in ensuring that your strategic IT project is delivered successfully, within budget and on time (rather than a hurdle to be overcome before work starts).
  2. You should allow sufficient time for negotiation (rather than rushing to meet the supplier’s deadline for signature).
  3. Invest resources to ensure that the specification reflects all the supplier's initial promises (too many do not).
  4. For fixed price contracts, you should ensure that the wording does not leave room for hidden extras.
  5. The contract should provide sufficient incentive for the supplier to deliver what you expect and provide adequate protection and compensation for you if things go wrong.
  6. Your senior management or board should receive reports on the main technical and legal risks at all key stages of strategic IT projects so that they can examine the consequences of accepting any risks carefully.
  7. Finally, consider not committing to one supplier too early on. If you have another supplier waiting in the wings, you will be in a much stronger position if it becomes apparent that the chosen supplier is not going to deliver what you expect.

IT is critical to success in many areas in the fashion & retail sector – from ensuring stock is in the right place at the right time to back office invoicing and payroll systems. So, meltdown of a retailer’s IT system has a serious effect on its business. Surprisingly, many such problems stem from inadequately negotiated or poorly worded contracts.

There are often no winners if an IT project goes wrong, as one retailer and its supplier learnt to their cost when they fell out over an £11 million software upgrade. Only during the course of the dispute did it become clear that each party had a very different view of what the supplier was supposed to deliver. After two lengthy, expensive (and inconclusive) court cases, the retailer was left without the system that it wanted and the supplier was reportedly left out of pocket on fees.

Many such projects fail because the customer relies on what it expects to be delivered rather than the letter of the contract. So what can you do to avoid such problems arising? >>

For further information, contact:
Conan Chitman
+44 (0)20 7440 7110
conan.chitham@mishcon.com