Context Law: An Information Technology Law Firm


Spend Reduction

Given the challenges presented by the current economic situation, cost savings in IT transactions are more important now than ever. Many healthcare entities have significantly curtailed their non-essential IT purchases due to financial concerns. Context can provide several ways of reducing information technology costs, both with regard to existing contracts and new contracts.

Context can Review Existing Contracts and...

  • Assist you to identify those vendors with which the majority of your information technology dollars are being spent.
  • Negotiate reductions in existing payments being made to such vendors, such as license fees for term-based licenses, maintenance and support fees, professional service fees, and subscription fees.
  • Review licenses and the maintenance programs you have purchased to determine areas of "over licensing" and the potential for a reduction in your level of maintenance and support.
  • Re-negotiate discounted pricing for your system based on current economic conditions.
  • Review the terms and conditions of existing contracts to take full advantage of the existing terms (pricing for new products purchased, caps on renewals, etc.).

Context can Negotiate New Contracts and...

  • Scrutinize all license fees, maintenance fees, and consulting/implementation fees to ensure you are not overpaying based on current economic conditions and our general industry knowledge.
  • Explain possible advantages of restructuring the deal (term license vs. perpetual license; hosted solution to avoid the additional upfront infrastructure costs; using a leasing company to finance the transaction to allow you to make payments over time).
  • Lock in rates for future purchases.
  • Negotiate the commencement date of maintenance and support payments to a later date (e.g. after expiration of any initial warranty period).
  • Structure payments as far out into the future as possible; withhold a meaningful percentage of fees until acceptance or another significant performance-based milestone.
  • Require the vendor to agree that the pricing offered to you is as good as any other similarly situated customer buying similar products and services, or, at the very least, begin a conversation with the vendor about why you would not be getting the best deal they can offer.

If you have a good relationship with your vendor and they want to keep your business, they should be aware that the goodwill created during this difficult time can only make them a more attractive vendor after the storm is over. While a vendor may not be legally obligated to agree to the foregoing, all vendors are aware of the economic conditions and are likely willing to discuss reducing fees.

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