Enterprise Software: Warranty Woes - ' How to Get a '

Another way to get something that resembles a product warranty from software suppliers: Become a technology executive at a large company, like Scott.

Companies like GM and Halliburton can often dictate terms with vendors and get warranties that flawed code will be fixed. When there are hundreds of millions of dollars at stake, a company can insist on items such as payment based on acceptance testing for large implementations, interoperability guarantees and free code fixes.

In the end, Norman of Kirkland & Ellis says companies will have to vote with their dollars. Large companies will have to shun software vendors that won't assume any liability for malfunctioning software.

Small- and medium-sized companies will have to band together and insist on a standard set of warranties from providers of off-the-shelf software that at least guarantee the buyer that applications will be free of code defects and be secure outside a lab.

"There will have to be some kind of collective action by smaller midsized companies since they will be the ones getting software off the shelf," Norman says.

Stan Alexander, vice president for technology strategy and architecture at EDS, agrees.

"As the world moves toward packaged applications and no modifications, this will be more of an issue," Alexander says. "If a company is not dinking around with the code, it's reasonable to me that there will be some kind of better warranty."