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Outsourcing data processing: planning for the disentanglement.

M E Moss1, M L Gordon

  • 1Gordon & Glickson, P.C., Chicago.

Journal of Healthcare Materiel Management
|May 8, 1993
PubMed
Summary
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Data processing (DP) outsourcing contracts require careful planning for both the initial transaction and future disentanglement. Proactive negotiation of exit strategies and risk mitigation, such as establishing separate entities or liens, is crucial for preserving data center integrity and value.

Area of Science:

  • Business Management
  • Information Technology Law

Background:

  • Data processing (DP) outsourcing is a common business practice.
  • DP outsourcing contracts present unique challenges beyond typical acquisition agreements, particularly concerning technology and employee integration.

Purpose of the Study:

  • To highlight the complexities of DP outsourcing contracts.
  • To emphasize the importance of planning for contract disentanglement and data center integrity.
  • To identify key risks and mitigation strategies in DP outsourcing.

Main Methods:

  • Analysis of conventional acquisition transactions in the context of DP outsourcing.
  • Examination of contractual elements essential for preserving data center value.
  • Identification of potential scenarios and procedures for contract disentanglement.

Related Experiment Videos

  • Exploration of risk mitigation techniques for supplier business failure.

    • Main Results:

    • DP outsourcing involves intricate software, technology, and employee considerations.
    • Preserving data center integrity requires specific contractual terms for facility reconveyance.
    • Proactive negotiation of disentanglement procedures during the initial contract phase simplifies exit.
    • Potential risks include supplier business failure, necessitating mitigation strategies.

    Conclusions:

    • Successful DP outsourcing hinges on comprehensive contract negotiation, including detailed disentanglement clauses.
    • Mitigating risks associated with supplier failure, such as through separate entities or liens, is vital for safeguarding customer assets.
    • Strategic planning for both the initiation and termination of DP outsourcing agreements is essential for long-term business continuity.