Improvements, Upgrades & Change Control -
Software Licence Agreements and Software Development Contracts - Part 5

Additional Services and Improvements (Upgrade Services)

Provision may be made in software license agreements for further development and/or customisations by the software supplier. These are commonly dealt with in two ways. Firstly, the supplier may be required to provide a quote for the development services requested by the licensee or alternatively the software supplier may be granted entitlement to charge time and materials at published rates. It is rare in this day and age for suppliers to be given a blank cheque to perform further services for licensors wishing to improve the functionality of the software.

In packaged software and commissioned software licence agreements, especially in the case where the software is licensed on a non-exclusive basis and constantly improved and developed, licences often entitle the licensee to improvements for a fixed period. In the case that a licensor has uniquely funded the development but receives the software at a reduced price, more favourable rights to receive improvements are commonly encountered.

Change Control

Effective change control provisions are imperative to prevent scope creep, but in order to be effective, a functional specification or other document must be incorporated into the agreement to provide a point of reference for change control. Change Control provisions also allow an elegant mechanism for the software supplier to extend the delivery time scales. Where scope creep occurs, the supplier may not have a problem performing the additional work, but to perform the work in the same timeframe as original work is unrealistic. The focus in this sense is contract management: managing the deliverables, and when they are to be delivered. Change control is not to be underestimated.