Navigating IT Supplier Disputes: Key Insights for Small and Medium Enterprises

For small and medium-sized enterprises (SMEs), partnering with an IT supplier can be a critical step towards growth and innovation. However, when things go wrong, the consequences can be frustrating and costly. Whether it's delays, subpar service, or software that simply doesn't work as promised, these issues can disrupt your business and lead to significant challenges.

When Problems Arise

Several issues commonly arise in IT supplier partnerships:

• Misaligned Expectations - deals are sometimes based on incorrect assumptions about the software's capabilities or the complexity of the project. This can result from unclear project scope or unrealistic promises leading to disappointment and unmet goals.
• Substandard Performance - suppliers sometimes fail to meet the agreed-upon standards, resulting in poor software quality or inadequate service. While it might be difficult to quantify the financial impact, the frustration caused by substandard software can have a significant impact on how your business operates.
• Delays -  IT or software contracts will often stipulate key milestones or delivery dates for installation or updates of the software. Delays to these milestones can often arise from project management or unforeseen technical challenges. When the delivery of key project milestones is delayed, it can throw off your entire timeline and result in additional costs or missed opportunities.
• Faulty Software - SMEs must rigorously test software as wholly or partially defective software often leads to claims of breach of contract. For the business paying for the IT services, you should make sure that your contracts include provisions for addressing defects, as failure to meet the basic requirements outlined in the agreement regularly gives rise to claims.

Proactive Strategies for Mitigating Risks

SMEs can take several steps to minimise the risks associated with IT supplier partnerships:

• Detailed Contract Drafting - a well-drafted contract should clearly outline the scope of work, performance standards, timelines, and remedies for non-performance. Including specific clauses for defect resolution and project management expectations can prevent many issues.
• Thorough Supplier Selection - evaluate potential suppliers based on their track record, technical expertise, and customer service, not just cost. Conducting due diligence, including reviewing references and case studies, is essential.
• Ongoing Project Management - regular oversight and communication help keep projects on track. SMEs should conduct frequent progress reviews and maintain detailed records of all interactions to quickly address issues that arise.
• Preparation for Disputes - even with the best precautions, disputes can occur. Engaging legal counsel early can help resolve issues through negotiation, mediation, or litigation if necessary.

How can Gannons help you?

Whether you're at the drafting stage or facing a dispute, it's crucial to address potential issues proactively:

• Risk Mitigation - we can assist by identifying and addressing potential risks to your business that might not be apparent by including specific provisions in your contract. Our experience will make sure that your contract covers all essential aspects including delays, partial performance, and defects.
• Dispute Resolution - if a dispute arises, our experience means that we can offer you strategic advice that is tailored to your circumstances. Whether this is through negotiation, mediation, or litigation, we can advise you on the range of options available to you.
• Case developments and knowledge - courts are increasingly considering the full scope of issues arising in relation to IT service contracts. Our experience in handling breach of contract cases allows us to provide informed advice based on the latest legal trends.
• Efficiency - although legal services may involve an upfront cost, we can help you avoid a far more expensive mistake further down the line.

IT supplier partnerships can be a powerful tool for SME growth, but they come with risks. Don't let IT supplier issues derail your business. Contact us to ensure your IT service contracts are airtight and to get expert guidance if a dispute arises.