Five Key Contract Negotiation Points for Cloud
Everybody thinks about taking their IT to the cloud—but as businesses gain experience with cloud providers, they are also recognizing key elements that they should have discussed before signing on the dotted line. Here are five keys to success you should never forget.
Service level agreements (SLAs)
Does your cloud provider have them? A surprising number of cloud providers don’t warrant their service levels to their clients. This leaves clients with very little leverage when the cloud fails them due to an outage or poor service. Cloud service outages happen more than they should. If your cloud provider isn’t offering you any service level performance standards in its contract, be sure to insist upon them—and add an addendum to the contract that specifies what you expect.
Exit as well as an entry strategies
Initially, everyone is excited about a new cloud contract, but if service levels don’t end up being what they were promised to be, that initial enthusiasm can quickly fade. Many times the failure to deliver is the fault of the cloud provider. In other cases, unforeseen circumstances, such as the cloud provider being acquired by another company, change the level of performance. If the situation deteriorates enough, you will want to get out of the contract. One way to facilitate this flexibility is to negotiate (and add) to the contract an exit clause provision that allows you to give the cloud provider thirty days notice of your intent to terminate. This flexibility eliminates the need to negotiate painful back-outs from multi-year contracts that could entail legal struggles.
A stable account rep relationship
When you outsource service to the cloud, a key success factor is having a strong account representative at the cloud provider who understands your business and will go to bat for you when you need service, or a resolution to a problem. Often, cloud providers put their best account reps on your account when they are first installing you and “earning” your business. After this introductory period, you become a “regular” client that the provider begins to take for-granted. Then one day, you suddenly find yourself with a new (and usually less experienced) account rep that is assigned to you. Don’t let this happen. As part of your contract, include a clause that gives you the right to interview and pre-approve any person that the cloud provider wants to assign to you as your rep.
Ownership of the data center
Does you cloud provider own its own data center? If the answer is no and it is sub-contracting with a third party for data center services, both you and your cloud services provider have much less control over the reliability of the cloud service. Avoid this situation if you can. During your pre-contract discussions with a cloud services provider, ask the provider if it owns its own data center. If the answer is yes, you at least know that the cloud provider will be fully accountable (and answerable) to you for cloud performance and problem resolution.
Disaster recovery commitment
If you choose to place a service that is mission-critical to your business in the hands of a cloud services provider, it is not enough for the cloud provider to tell you that it has a disaster recovery plan (DR) in the event of a service outage. Instead, you should negotiate with the vendor an annual test of your mission critical disaster recovery to ensure that e recovery really works. Both you and your cloud services provider should participate in the DR testing.