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Overcoming App Angst: How Procurement Can Avoid IP Issues.

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Apps are central to many people's lives, but they are generating both enthusiasm and angst in the business world. In this guest post, Simon Atkinson of specialist procurement consultants, Occumen, explains why… 

Consumer apps are in abundance – from entertainment, publications and games, to those providing a useful business-related service. Parking your car? Booking a hotel room? Working out the next gym exercise? There's definitely an app for that.

And enterprise apps are on the increase, including apps for professional services: accountants, for instance, are offering practice-branded apps through the likes of MyFirmsApp, offering clients helpful advice and tax calculations at the touch of a screen. Daily client interaction is also becoming more effective via cloud-based software, such as Xero, which comes - of course - with the obligatory app.

Yet, amidst all this enthusiasm, there's also an element of angst. App development has already cost unwary companies thousands of pounds more than necessary, simply because the initial procurement process has left them vulnerable.

Procurement is key in the app revolution


Given that the vast majority of apps will be created by third party suppliers, it's the procurement team, rather than IT or marketing, that should be asking a number of key questions before any development starts:

  1. Whose IP?

The most important element of any application, other than its functionality, is the Intellectual Property (IP) that sits behind it. It's essential for IP ownership to be clear from the outset between the purchaser and the developer. Who owns it? Is it transferrable? If not, what restriction does that place on the use and distribution of the app? Therefore the right legal support needs to be in place when contracting to tackle the ever changing challenges of IP in the digital world.


  1. What's the use?

In conjunction with IP, it's vital to understand and agree all aspects of the app's use. This relates to the operating platforms – e.g. iOS, Android, etc. – and any restrictions that the coding, development or IP place on the physical use of the app. Once an understanding of the app use has been developed, it is then critical to select the right app developer, but how do you choose which one to use? So many are small owner-led companies with a limited track record and questionable financial stability...

  1. What's the real cost?

Not only should contracts be specific about the cost of initial supply of the app to the purchaser, but also any cost to the end user. It is vital to know the premium charged by platform providers and the percentage of income (if any) that will be earned by both the app owner and the developer. How the margin or any royalties will be split between all parties should be clearly understood.


  1. Is it global?

Local, regional, or global availability of the app all have implications for the procurement contract. This will include: legal rights and responsibilities for the apps licensing and management; language, cultural, technical and data considerations and fulfilment requirements, which all need to be clearly identified and established at the outset.


  1. What are the requirements for future developments?

While the app may be a winner from the start, there are bound to be ‘bugs' and ‘tweaks' that will need development, or new functionality demanded by the business or end users. Not allowing for this within the initial contract, or through a structured agreement that accounts for future development, is the IT procurement equivalent of signing a blank cheque.


There will always be risk in developing a new app – it's what makes it exciting - but this can be effectively managed if internal teams (procurement, marketing, finance, etc) work together. If the right questions, often simple and non-technical, are being asked at the outset then potentially costly issues can be identified before they occur.


Simon Atkinson is managing partner at Occumen.

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