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TECH SUPPORT So, many lawyers are seeing increased activity in this space, and will likely continue to do so going forward. Card also argues, however, that much more is riding on these transactions than in the past. IT is increasingly at the heart of what companies do, he says. It's no lon- ger just a cost centre, it's often a critical enabler of whatever competitive advan- tage an enterprise enjoys, a fact reflected in the growing power and influence of IT management in companies. More importantly, the ascendancy of IT coupled with increased scrutiny of corporate management in general, means the conduct of IT transactions will increasingly be a matter for the au- dit committee. "These transactions will be scrutinized in the future," says Card. "How were they conducted? What kind of expertise was brought to bear? Did you have competent staff to negotiate that $100-million outsourcing deal? "If something goes wrong — and a significant percentage of these transac- tions do end up involving disputes or dissatisfaction between the parties — who conducted the transaction and why they conducted it the way they did will be looked at. The person who led that deal has to have answers." Card seems to ratchet up the FUD when he says vendor lawyers are past masters of the complexities of these transactions, but lawyers in buyer com- panies will typically only have been in- volved in one or two such deals. "The vendor's counsel may always have some- what of an advantage," he says. "And buy- ers routinely underestimate the business complications and challenges of these important transactions." Many pitfalls lie in store for the un- wary, he warns. Protection of intellec- tual property rights is just one thorny issue. When a company engages a soft- ware vendor to create a highly custom- ized solution, for example, some of the features of that solution may actually be contributed by the buyer's IT team. And it almost always incorporates work flows and business practices that are proprietary to the buyer and may be the keys to its competitive advantage. Does the vendor have the right to turn around and sell the customizations created for you to other customers, including pos- sibly your competitors? To what extent should it be able to use any of what it has learned about the inner workings of your company in the course of working on a project? "Those intellectual property rights must be protected," Card says. "So what's the line between the customer's right to protect their often-very secret competitive advantage and the vendor's reasonable and legitimate right to general industry knowledge and know-how? And how do you demarcate that in the transaction?" Complex regulatory issues may come into play as well. In some regulated in- dustries, especially health care, privacy of data is a huge concern. How do you protect it when outsourcing data-man- agement services, especially offshore? Some industries are in fact restricted as to how and whether they can outsource 36 APRIL 2008 www. C ANADIAN Argosy_CL_Apr_08.indd 1 mag.com 3/17/08 12:58:29 PM