Over the past two days, I’ve been blogging about my presentation to the IP Summit on June 5, 2018 in Chicago. Part I revealed to vendors the three main reasons why so many ERP software implementations end up in lawsuits. Users learned in Part II the four lessons they should take away from ERP software failures.

In this blog, I discuss the role that negotiating and drafting the ERP software license and ERP implementation contract plays in helping avoid an ERP software implementation lawsuit  for both vendors and users.

My first recommendation as an ERP software attorney to users is to not sign the template contract provided by the ERP software vendor because it is almost always one-sided and often provides little recourse in the event something goes wrong. What I tell vendors is that both they and the user need to ensure that the contract anticipates installation, usability, functionality, timelines and costs so misunderstandings can be avoided.

I always write into an ERP software license contract both a specific definition of the ERP software product being licensed and meaningful software warranties, representations and remedies. The contract must precisely define what the user is licensing in common sense language: The modules being licensed, the features and functionality. In addition, the ERP Software contract must comprehensively describe upgrades, updates and how bugs will be fixed.

Vitally important to the ongoing relationship between ERP software vendors and users is the ERP implementation contract and statement of work.

This will include a number of specific elements:

  • A detailed cost estimate for the project.
  • The precise scope of the work including a procedure for change orders and the impact on any changes to the price, the scope of the project and deliverables.
  • The deliverables must be defined up front so the vendor knows what they are developing and the user knows what its ERP system will include.
  • Specific deadlines that both the vendor and user must meet.
  • Benchmarks and milestones that are necessary to ensure that the project is on time and complying with what the user is ordering.
  • A process by which the user may accept or reject the deliverables.


As a management and operational tool, ERP software has been around for a long time. Over the years, there have been too many “train wrecks,” and I have witnessed most of them being caused by misunderstandings that could have been avoided at the front end.

In a way, the ERP software contract is sort of like a pre-nuptial agreement between a couple that wants to get married: They each are hoping and planning on happily ever after but the pre-nup covers the worst-case scenario and avoids “he said, she said” arguments in court if things go horribly wrong.

Both the ERP software vendor and a user go into a new partnership counting on a long-term relationship. The ERP contract helps both sides know their responsibilities and rights up-front, and helps ensure they work together happily ever after.

By Marcus Harris