You have finally selected an LMS after wading through the marketing materials from multiple suppliers and demoing individual tools and features. It is time to green light a selection and sign a contract. But wait. Here are some issues to consider before sealing the deal.

Have legal review the contract

If you have a legal department at your company or a legal representative associated with your firm, have them review the contract prior to signing. If they choose to alter the contract, send it back to the supplier and have them make changes. Once you receive an updated contract, have legal review this version to ensure that all changes were made adequately.

If your organization does not have an internal legal department or outside legal representation, read everything carefully (may take multiple readings) and check for accuracy. Make sure you are not giving the supplier unfettered rights to your proprietary courses and content, the right to use your name without your permission, and so forth.

Requirements to include

Itemize everything. That's right, everything. For example, state explicitly the number of and cost for seats your contract entitles you to. What about an e-commerce module or an additional talent development module? What about the cost of customer or technical service?

Include an out or exit clause. If you are signing a multiyear contract for your system, include an out clause. At the end of each year, most multiyear contracts auto renew unless you give 30 days notice prior to the end date of the contract. Avoid 60-day clauses. Thirty days should give you plenty of time because you will likely be preparing internally for the split before notifying the supplier.

Protect your proprietary content. Make sure that everything that is yours, remains yours. It is as simple as that. Include verbiage in the contract that content your organization creates and loads into the LMS, including courseware, ebooks, mp3s, and so forth, returns to you if you move to another supplier.

They cannot use your company name or logo without your permission. Most contracts already have this item in place, but have legal check.

Specify total costs and discount breakouts. Clearly, the total cost figure is obvious. But you also want to see any discount percentage breakouts if available (for example, for multiyear contracts). You should see an original total cost, then discount break percentage, then the new final total cost. Not, total cost and they tell you a discount is included.

Items that should be free

I believe certain items should be included as general service, such as customer service, tech support, and training. For example, telephone and email communication to discuss something that is wrong with their system should fall under general service. Caveat: Only the system administrator should contact the supplier, not employees or customers.

Be sure to find out the customer service hours and response times to expect. Does the supplier follow EST or PST; are they available on weekends or holidays? Have these issues itemized in the contract and classified as free-of-charge. If this is not specifically listed in the contract, then you have no idea whether you are paying for it. regardless of what they are saying.

Under the heading of tech support, the supplier needs to be responsible for taking care of any bugs in the system. If it stops working due to a virus, for example. More important, they supplier should manage the implementation of any non-optional system upgrades. This includes training.

With regards to training, I wish I could say that 100 percent of all vendors provide training for free. Unfortunately, here is how training often works:

  • The supplier will train one person (your choice) for free; most likely via a webinar or a series of them. Sometimes these events are live events that include other clients, as well. In addition, your organization will receive training materials (read: PDF) to distribute to others, and an online FAQ it can access.
  • If you want additional employees to receive training, there is an additional fee. This, of course, begs the question: If training is via a webinar, how will they know others are viewing it?
  • If you want face-to-face training, it almost always costs extra. Plus you may pay for travel expenses.

Also, many suppliers love to toss in their customer service support with training, so watch out. It is a package deal! Negotiate at this point. Also, beware that it often is a salesperson providing the training rather than an actual trainer.

Contract addendums

Addendums are items your organization may consider down the road, and you want an idea on the potential costs upfront. Here are some suggested items you may want to have listed in an addendum:

  • additional seats; seat packages rather than individual costs
  • future talent management modules, such as onboarding, succession planning, content development
  • future social media modules
  • e-commerce options, if not already included.

Bottom line

During the final phase of negotiations, you never want to be so aggressive that it becomes some massive battle. At the same time, if the supplier is inflexible to points your organization feels strongly about, it may be ared flag to reassess whether this is the company you want to partner with potentially for several years. Before you sign on that line, remember you have some leverage, so use it.

Final Tip:

Always request a copy of the contract that has been signed by both parties. Many companies sign the contract, scan the copy, and email you a scanned file copy ASAP. But be sure to have a hard copy of the contractwith their signaturemailed to you.