Outsource Magazine Issue 27 - (Page 100)

Breaking Up A recent court judgment in the UK has significant implications for those looking to exit an outsourcing relationship… Paul O’Hare, NOA Paul O’Hare is Partner, Commercial Technology Practice at Kemp Little LLP and a National Outsourcing , Association Board Representative for NOA Legal Members. T 100 ●● he recent High Court judgment in AstraZeneca (AZ) v IBM (22/11/11), in which the Court was required to interpret the exit provisions in an IT outsourcing contract, serves as a reminder of the importance to both sides of ensuring that the exit terms of the contract receive careful attention at the contract negotiation stage, and that the terms governing the exit arrangements are clear and unambiguous, not least because these terms will be invoked at a time when interests are no longer aligned, and when the commercial relationship between the parties may well have broken down. Background AZ and IBM entered into an outsourcing services agreement in 2007 for the provision of IT infrastructure services from IBM’s data centre facilities in the UK, Sweden, USA and Japan. Some of the services were provided using systems and infrastructure that were also used to provide similar services to other IBM customers. AZ terminated the Agreement in April 2011, triggering the exit provisions of the Agreement. These provisions gave rise to a number of disputes between the parties, and in particular: the scope of IBM’s obligations during the exit period; whether transition of the services to a replacement supplier could be phased; the duration of the exit period; and IBM’s fees for providing exit services. IBM’s ExIt oBlIgatIons Under the Agreement, IBM was required to continue to provide the outsourced services for 12 months after the date of termination (referred to in the Agreement as the Extended Termination Date). In addition, the Exit Schedule stated that where the outsourced services were provided using “shared infrastructure”, IBM would, if required, offer to continue to provide the shared infrastructure for up to 12 months “In the arithmetic of love, one plus one equals everything, and two minus one equals nothing.” – Mignon McLaughlin www.outsourcemagazine.co.uk ● http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Magazine Issue 27

NEWS
PLANET ITO
NORM JUDAH MICROSOFT’S
IN THE KNOW
CALL BRITANNIA
DAVID EVELEIGH
CHAIN GAIN
CAN EVERYTHING BE OUTSOURCED?
NOA ROUND-UP
QUICK CHANGE?
TRANSFORMING FINANCE
CAROLINE STOCKMANN
GOOD REVIEWS
OUTSOURCING IS NOT MAKE VERSUS BUY: IT IS A CONTINUUM
PAYING ATTENTION
POWERING UP YOUR CUSTOMER SATISFACTION ENGINE
BEHAVIOURAL ECONOMICS
HEAD-TO-HEAD
TOP TEN
THE LEGAL VIEW
HFS RESEARCH
HEADLINES...
ONLINE ROUND-UP
INSIDE SOURCE
THE LAST WORD

Outsource Magazine Issue 27