Table of Contents
Hitoshi Goto
Ukihiko Takagi
In the previous article, we covered ‘uniquely Japanese IT techniques’ that do not work in overseas projects. This time, we will look at how to handle ‘warranty periods’ that vary by country.
In Some Countries, the Warranty Period Is Only 30 Days
Legal matters also came up in Part 5 of this series, but that was about laws that should be incorporated into ERP as business requirements. Below, we will discuss laws and customs to consider when working overseas.
System development in Japan is often conducted under contract agreements, and in this case, under civil law, the warranty period is within one year, and it is strict liability (the contractor bears responsibility for corrections even without fault). However, the contract takes precedence, so depending on the contract, the warranty period may be six months, and it may be fault-based liability rather than strict liability.
That said, the common understanding is that warranty liability typically lasts one year after acceptance, or possibly six months for smaller-scale system development.
However, this ‘common sense’ did not apply in Brazil. We requested substantial customization from a local ERP vendor, but we received contract documents stating a 30-day warranty period and were asked to sign.
We felt we could not assume delivery responsibility under those terms and engaged in tough negotiations with the vendor, but in the end, a 15-day extension was the limit. India is similar, where one month is said to be the norm.
On the other hand, some countries and regions have longer warranty periods. China is one such example, where two years is typical.
Specify the Period Clearly in Contracts or Statements of Work
The important question is how to respond in countries and regions where short warranty periods are customary. There are two key points.
The first point is clarification in the contract. This is the same as in Japan, where it is common practice to clearly state warranty liability in the contract.
Note that while not common in Japan, in many countries and regions overseas it is customary to specify this in the SOW (Statement of Work) rather than the contract, so in such cases, specify it in the SOW. However, be careful because SOWs often list items as ‘best effort goals,’ so make sure the language does not reflect that.
That said, in some countries like Brazil, even with negotiation, six weeks is the maximum. In other countries and regions as well, Japan’s customary one year is often not accepted. Therefore, the second point is to consider quality management that assumes a short warranty period.
In this case, there are broadly two strategies. One is to conduct acceptance testing more thoroughly than in domestic projects. Of course, the ordering user company must prepare an adequate testing structure and timeframe, and test cases must also be thought through as comprehensively as possible.
The other is for the ordering side to budget for initial defect remediation costs. If you cannot get free corrections, you have no choice but to budget for them.
This is slightly off the topic of global projects, but budgeting for initial defect remediation costs is also a valid approach in Japan. This is because even in domestic projects (especially when placing phased orders), determining which phase caused the defect – requirements definition, design, development, or testing – changes who bears warranty responsibility, making warranty discussions tend to become complicated.
As a practical approach to budgeting, it is realistic to secure a larger development team until stable operation is achieved.
