Vendors score poorly on indemnity test

Vendor warranties and indemnities disappoint Australian IT managers, many of whom find they carry the burden of glitches and mistakes delivered by their suppliers.

The added challenge comes despite a proliferation of legal, governance, risk mitigation and auditing requirements fast becoming the norm for many enterprises.

Such is the case for Mark Slater, IT manager Greater Murray Area Health Service in southern New South Wales.

Though Slater hasn't experienced any large problems with software applications, he feels that businesses must learn to look after themselves.

"IT vendors don't really offer adequate coverage when it comes to warranties and indemnity, because there always seems to be an easy way for them to get out of it," Slater said.

"One of the main things IT managers need to do is really understand what the problem is, and where the fault lies when facing this issue.

"This is hard, because unless you have an in-depth knowledge of an application you can get snowed under by all the technical talk."

However, Slater believes that organizations should carry a reasonable amount of responsibility, and Ernst & Young manager of risk and technology Chris Gatford agrees.

"With corporate governance these days, businesses now have to carry a bit of responsibility, they have to buy-in right from the beginning when it comes to their IT strategy and taking responsibility for it," Gatford said.

Wattyl Australia IT manager Ian Rootsey also thinks that organizations should take care of themselves when entering warranty and indemnity agreements.

"By and large we've never really had any problem with warranty and indemnity, and I think, as with anything else, you have to make sure the warranty is watertight before you agree to it," Rootsey said.

However, an IT manager at a major construction company who wished to remain anonymous is more cynical.

"I don't think any of us expect anything from vendors now; they've conditioned us to think like that," the CIO said, adding that most large software applications are "fairly mature" and that "most glitches are people glitches, which can be fixed by people themselves."

Similarly a senior IT manager at one of the big four banks cautioned that even if indemnities are available, they would be like "getting a refund and a new gate when you really need the horse back".

"If a deployment went wrong and we lost 100,000 customers an indemnity would not bring them back. It would take years in court and be nearly impossible to quantify. We have a statutory obligation not to be that reliant on IT vendors," the bank source said.

- with Julian Bajkowski

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