Skip to main content

ERP Contract Checklist

The ERP contract codifies the commercial and operational relationship between buyer and vendor for 5-15 years. Like any complex software contract, vendor templates favor the vendor; pushing back on specific clauses is standard practice for serious enterprise and mid-market buyers. This checklist covers the contract clauses that recurringly matter most in US ERP procurement — what to look for, what to push on, where vendors are typically flexible versus rigid.

License and subscription terms

  • User-license definitions — full users versus team members versus self-service users; concurrent versus named users; counting method for usage-based billing
  • Module bundling — what is included, what is extra cost; bundling discounts versus a-la-carte pricing
  • Subscription escalators — annual price increases (typical 3-5%); cap on escalators; tied to a specific index (the U.S. Consumer Price Index)
  • Volume tiers — pricing breakpoints as user count grows; ability to add and remove users without contract renegotiation
  • Co-terming — aligning add-on products and renewal dates to one contract anniversary

SLA and support terms

  • Availability commitment — minimum 99.5%, target 99.9% for mid-market production ERP; verify exclusions (planned maintenance, force majeure, customer-caused)
  • Support response times — by severity (P1-P4); negotiate tighter P1 commitments if production-critical
  • Resolution targets — how fast issues are resolved or mitigated; financial credits if missed
  • Service credits — cap and escalation; typical 5-25% of monthly fee
  • Maintenance window scheduling — customer-friendly hours; advance notice requirements
  • Patch and upgrade timing — customer-side control over major upgrades (especially cloud); ability to defer disruptive updates

Intellectual property and data

  • Customer-data ownership — the customer should own all data they put into the ERP; vendor has limited rights to process for service delivery
  • Vendor IP protection — vendor retains rights to underlying software; customer licensed to use, not own
  • Customization IP — who owns customer-funded customizations: customer-owned (strong), shared (typical), vendor-owned (weak for customer)
  • Data Processing Agreement (see DPA) — data-protection terms covering applicable US state privacy laws (CCPA/CPRA and equivalents) addressed comprehensively
  • Indemnification — vendor indemnifies customer against third-party IP claims on the ERP; mutual indemnification on customer data
  • Confidentiality — symmetric obligations protecting both parties' confidential information

Exit and termination

  • Termination rights — specific events allowing termination (material breach, vendor insolvency, security incidents); cure periods
  • Data extraction — vendor obligation to provide customer's data in usable format at exit; format specifications (CSV, JSON, database dump); reasonable timeframe
  • Transition support — vendor cooperation during migration to successor system; pricing for transition services
  • Wind-down period — reduced-functionality access for legal-retention purposes (such as IRS and SOX record-retention obligations) after termination
  • Source-code escrow (on-premises only) — protection against vendor insolvency
  • No early-termination fees if vendor breaches; pro-rata refund for unused subscription period

Audit and compliance

  • Customer audit rights — right to verify vendor's compliance with contract; reasonable notice and frequency limits
  • Vendor audit rights — vendor's right to verify license compliance; limited to reasonable scope and frequency
  • Compliance attestations — SOC 2, ISO 27001, SOC 1 (for controls relevant to financial reporting and SOX), industry-specific certifications (HIPAA, PCI DSS, FedRAMP) maintained over the term
  • Sub-processor management — list maintained, change notification, objection rights
  • Breach notification — vendor notifies customer within tight, contractually defined time windows (often 24-72 hours) for security incidents, ahead of statutory state-law deadlines

Related Topics