Be prepared for the challenges of digital transformation – David Woods

Securing a successful outcome for any major digital transformation project can be a challenge for even the biggest commercial businesses. For those higher education (HE) providers with limited IT resources and experience and a complex IT estate, the challenge can be even more significant.

David Woods is a Partner and IT Dispute specialist, Pinsent Masons.

As providers look to modernise and simplify their IT estate and take advantage of new technologies, the number of IT procurements in the HE sector is increasing. While there are numerous benefits from moving from legacy to digital systems or adopting new technologies, in some cases providers lack the knowledge and internal expertise to best inform and structure the procurement. This can have a major bearing on the success of projects.

However, all HE providers embarking on a major digital transformation project can do certain things to minimise the risk of their project failing. This includes careful upfront planning around how they will procure new systems and services and good project management throughout the project.

It is important providers carefully consider the form of contract they will use to purchase the IT solution. Often, the contract issued by the provider to bidders during the procurement process (which is ultimately to be entered into with the successful bidder) is unsuitable or off-market for the solution in question. Getting this right up front is key to minimising the risk of the project failing to deliver.

As part of the procurement phase of the project and in the contract, the provider will want to make sure it has clarity on the solution to be delivered, timescales and costs. This is to mitigate against unrealistic timeframes for delivery of the solution, lack of clarity over technical specifications, and miscalculated costs to the supplier of migrating data and systems to a new digital environment.

It can also lead to different interpretations over the aims of the contract and what it is due to deliver during the course of the project. These issues can cause delays and disagreement between provider and supplier and could result in significant additional costs to realign the project.

Getting the delivery phase of an IT project right is crucial. There are a number of different ways this phase can be designed operationally and contractually to mitigate the risk of project failure. The appropriateness of each needs to be considered on a project-specific basis. Some examples include having separate design and implementation phases so parties can take stock of project progress and whether it is meeting the provider’s requirements, ensuring there are appropriate mechanisms in place to govern and track project progress and address any delivery issues or concerns, and structuring financial rewards to be payable upon successful completion of set milestones.

When things go awry, it is in no one’s interest to go into a formal dispute. Even if a provider is in the right and can get money back from the supplier for a breach of contract, it will still be left without the new system they wanted. A potential solution is for provider and supplier to work to renegotiate the terms of their contract to better reflect the practicalities of the work needed and commercial reality of the project. The contract will have mechanisms in it for agreeing variations and changes, which can be used during negotiations to seek agreement on a way forward.

But, it is important that, whilst seeking to get the project back on track providers preserve their existing contractual rights and have necessary evidence to support any future claim for redress, should renegotiation talks break down. While litigation may be a last resort, providers must be aware that courts will look to see if parties to contracts have exercised their rights under the contract or waived them, whether inadvertently or otherwise, when they come to consider any claims of breach made against the supplier. As a result, it is in providers’ interest to ensure there is someone who not only oversees performance of the contract by the supplier but who considers the impact of action taken during supplier discussions from a disputes perspective too.

A Pinsent Masons White Paper “Technology Revolution in the Higher Education Sector can be downloaded here https://www.pinsentmasons.com/en/media/publications/technology-revolution-higher-education/

David Woods is a Partner and IT Dispute specialist, Pinsent Masons.