Information technology (IT) contracts come in many forms and before taking on a project, organizations will provide detailed specifications of their needs. Using the specifications, the service provider and other types of sellers create an estimate of materials and man-hours required to complete the project.
Different situations require different contracts and organizations must understand the different types of contracts that fit their situation. Below are 5 principal types of IT contracts:
1. On-site Software License Contract
- The service provider installs the software on the organization’s on-site server to be used by the organization’s employees.
- The service provider can be the owner or distributes the software on behalf of the owner.
- The organization has limited rights to use the software and the software is owned by the service provider or the software owner.
2. Software Ownership Transfer Contract
- The service provider transfers ownership to the software copyright (or other intellectual property (IP) rights).
- Similar to an on-site software deal, but in this scenario, the ownership is transferred from the service provider to the organization.
3. Cloud Services Contract
- 3 main types of cloud services are software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS).
- The organization is given access to the service provider’s technology and hardware available through the internet.
4. IT Professional Services Contract
- The service provider provides programming, technical consulting, tech support or manpower to manage the IT services in an organization.
5. End-to-end Contract
- The service provider provides a combination of the 4 services above. To help the organization use the technology, the service provider provides the organization with the right to use the software, technical consultation and technical support.