Read the Fine Print!
Review Your IT Contract
A client of mine recently bought another company and was rolling it into his existing company. This was all going smoothly until the current IT provider sent over his contract buy out. The total cost of the buy out for the remaining 6 months of contract was $37,000.00!
A bit of a sticker shock for sure, especially if you’re not expecting it.
You should always be careful with any contract you sign, and you may want to take a look at your existing IT contract. If you are not happy with your current IT provider and want to switch to a new one, you may run into the same issue.
Here is what you need to look for in all of your contracts and in particular in your IT contracts;
Termination Clause(s) – this is generally how and when you can terminate a contract with the vendor. Some vendors are very difficult to cancel with. They tie you into a 1 year, or in some cases up to a 5-year contract. To break that contract, you have to then prove non-performance or neglect on the part of the vendor.
Automatic Renewal – many contracts today have a clause for Automatic Renewal. This means that upon the completion of the contract, it will automatically roll into a renewal contract unless canceled.
Note you also want to check on when you need to cancel these contracts, so they do not auto-renew. Many contracts require that you cancel 60 to 90 days before the end of the contract or it will automatically renew, not allowing you to cancel closer to the end of the contract date.
Buy-Out Costs – some contracts will require you to buy out hardware that you are using, such as servers, firewalls, software, etc. These costs can sometimes be as much as if the hardware was new!
At AcaciaIT, we don’t believe in tying you to a contract; our contracts are 1 year, auto-renew, but we have a 30 day out clause. If for any reason you no longer want to do business with us, all that we require is 30 days written notice! We do this because of 2 reasons; one tying you to something that you do not want or need only makes you resentful of our services and second, because our service is so good the only reason we see that companies leave us is due to circumstances beyond their control (i.e., the sale of the company, the company going out of business, or some other extenuating circumstances)
I know contracts are a boring read, but when it can save you thousands of dollars in the future, it’s worth reviewing these items carefully.
If you are concerned about your current contract and what you are being offered or billed for, please take a moment and reach out to me. I'd be happy to review and discuss with you. 520-751-0888 - Greg Durnan
Here is an actual example of an actual cancellation fee my client had to pay (with company and vendor information removed). Hopefully, these numbers will help you to carefully analyze your future IT contracts.
Posted with Permission
Greg Durnan is the Owner/President of AcaciaIT and very active in the business community of Southern Arizona. One of the founding members of the Greater Vail Area Chamber of Commerce and Chair-Elect of the Oro Valley Chamber of Commerce he is very concerned about the needs of businesses in Arizona. He also strives to educate clients on Computer and Network Security through Lunch and Learns, articles, and webinars.
On the weekends he enjoys spending time with his wife and son at their ranch in Vail and working with horses.