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5 Traps to Avoid in Cloud Negotiations

Your cloud service level agreement, or SLA, serves as your road map for your relationship with your cloud service provider. It outlines exactly what services you’ll receive, your service provider’s responsibilities, and any relationships with other third parties involved in maintaining and servicing your cloud computing system.

When developing or renewing your cloud agreement, be sure to not only look at price and inclusions but keep an eye out for other factors and red flags that might impact your business’s IT operations in the future.

Here are five key pitfalls to avoid in your cloud agreement:

1. Accepting a Boilerplate Contract

If you’re negotiating an initial agreement with a larger cloud provider, there’s a decent chance that they’ll want to move quickly and will first present you with a standard boilerplate contract. While you might be eager to get started, boilerplate agreements are designed specifically to protect only the vendor and don’t account for your unique needs.

A boilerplate agreement can serve as a jumping-off point for negotiations, but never feel obligated to sign on the dotted line at first blush. Take your time to understand all the outlined terms and conditions and make sure they meet your operational, and IT needs and that your contract is protecting your interests.

2. Overlooking Your Data Rights

In verticals where data is susceptible—such as education, healthcare, and finance—you will want an apparent agreement about data ownership, access, and encryption. In many cases, data appears to be totally secure and encrypted, but the service provider maintains full control of encryption keys. This causes a risk that the service provider might hand over the key to another party without your knowledge and can complicate things in the event of a breach, lawsuit, or other investigation.

Your cloud contract needs to include confidentiality provisions, ownership agreements, and encryption key control that suits both your needs and your cloud provider’s operations.

3. Unclear Security and Compliance Requirements

Your business data is a precious asset, and you need to know it’s protected. If you’re working in specific verticals such as finance or healthcare, you’ll also be subject to extra security layers and regulations beyond standard data protection acts. You need to understand how frequently your cloud provider audits their security against regulatory protocols, how data is stored and archived, and whether all requirements are being met.

You’ll not only want to know how your data is protected but where it’s physically stored. If your cloud provider’s servers are in Europe and your business is operating in the US, you’ll need to ensure that data is being kept in a way that complies with both sets of regulations—and that you won’t be subject to unexpected data export-fees.

4. Not Understanding the Transition Plan

Most standard cloud SLAs will outline the ongoing maintenance of your cloud systems. Great ones will have information about onboarding your business and migrating your data into the cloud. You’ll want to make sure that this process, including any startup costs, is outlined in your contract.

While you might stick with a cloud service provider you love for years, the likelihood of never making a switch is slim. Besides onboarding, you will also want a clear sense of what happens when the contract expires or if it’s terminated before the expiration date. Be sure that the agreement includes a detailed process for exporting and transferring data and outlines if and for how long your service provider keeps backups after a transition.

5. Not Outlining Specific Fees and Taxes

In some cloud agreements, you’ll agree to a rate for service and then get caught off guard by transaction and maintenance fees, taxes, and other unexpected costs. In some cases, these fees can stack up to an additional 30% of the agreed-upon rate. Your cloud SLA's goal is to make sure you’re paying for what you use and that cloud computing remains cost-effective and within your budget.

 

In many cases, standard rates for cloud services are already inflated based on what your business actually needs. That’s why it’s so critical to work with an experienced negotiator who understands your unique business operations and cloud usage.

Improve Your Cloud Agreement

Cloud Negotiator does one thing: we work with businesses to ensure they’re getting the best possible solution from their cloud services. Whether you’re looking at an entirely new agreement, renegotiating in the lead-up to renewal, or looking to improve the way you conduct your own negotiations with the help of an experienced consultant, we’re here to help.

We understand that a great deal goes beyond a bottom-line dollar amount—it’s all about the value your organization receives and paying only for what you actually need. Get started today with a free, no-obligation review of your cloud estimate.