7 Key Terms for Negotiating Your Cloud Contract

February 28, 2013
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cloud computing contractAlthough cloud computing may be all about digitization and virtualization of your business data, the contract negotiation required for establishing a working relationship between two parties is still a completely human-based process.

cloud computing contractAlthough cloud computing may be all about digitization and virtualization of your business data, the contract negotiation required for establishing a working relationship between two parties is still a completely human-based process.

Since cloud computing is still in its early adolescence and has a long way to reach its full potential, both cloud providers and consumers are persistently striving to negotiate a mutually beneficial deal that continues to be equally rewarding for both parties involved in the long run.

Here are 7 key quintessential terms to consider while negotiating your cloud computing contract:

Finalizing Service Level Agreements – Service level agreements solidify the commitments on standards of performance and availability levels promised by the provider to the consumer on paper.

Data Availability – The best insurance cloud customers can possibly seek from providers is to ensure they make a necessary set of backups of your data in case of a system failure.

Liability of Damages due to Service Interruption – Even though a cloud service provider may be technically responsible for an interruption in service, they can bluntly refuse any monetary liability for the losses endured by their consumer due to the interruption. Hence, it is essential to clarify this clause beforehand with providers to prevent any liability arguments.

Having an Exit Strategy – Planning an effective exit strategy from your cloud service contract is always a smart move to make in order to prevent vendor lock-in. Issuing a notice of non-renewal to the provider within a particular period before expiry is an appropriate way to exit your contract without any legal hassles.

Geographic Location of Data Servers – Ensuring that data centers of your cloud service provider fall within a secure geographic location disclosed to you is an important term of negotiation for security-conscious consumers.

Grounds for Contract Termination – Service providers may terminate contracts due to non-payment, breach of user policies, or upon breach of intellectual property rights. Users usually terminate the contract due to the inefficiency of cloud services with respect to their business needs.

Data Retention Upon Contract Termination – Negotiating the terms and conditions of your business data retention upon termination of service contract is very important for legal purposes.

Research for this post was provided by Dynamics AX Houston software solution provider, Rand Group.

image via shutterstock

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