5 Uncommon Topics to Negotiate with a Cloud Provider:

When negotiating a cloud contract, most companies focus on the requirements, features, market popularity, and cost before making a purchasing decision. The following are often overlooked topics – but are still important to consider prior to signing a new cloud contract.

1. Negotiate a customer specific Service Level Agreement (SLA) – A SLA is specifically tied to service availability and/or performance, and contemplates what the cloud provider will guarantee, or at the very least try to accomplish, in exchange for being compensated in some way for not meeting it.  Most cloud providers offer an of SLA, but don’t include it in the standard contract language.  Most times the SLA is referred to as a separate agreement via URL embedded in the contract.  This allows the company to offer one standard SLA for all their customers and consequently change their SLA on a regular basis.  In addition, the penalties for not meeting the SLA are usually very low and not material enough to compensate a customer’s loss of business.  It’s up to the customer to understand when and how these changes may impact your business, and then what the risk may be to your business if the provider fails to meet their SLA.  Negotiating a customer specific SLA in your cloud contract allows you to hold the cloud provider more accountable based on your terms, and to be compensated much more to your benefit.
2. Negotiate Breach Language – In the age of security breaches, it’s not uncommon for cloud providers to be attacked on a daily basis.  In the event a cloud provider is compromised and your data is breached, it could pose serious business and financial risk to your company, depending on the type of data exposed.  Most companies don’t quantify the cost of their data falling into the wrong hands and trust the cloud provider will protect them.  It’s in the best interest of the cloud provider to minimize their own liabilities because of the magnitude of the cost of each customer’s potential damages and lawsuits.  By negotiating specific breach language into your cloud contract, you are applying, at a minimum, a financial layer of protection to compensate for your own data breach responsibilities, and also the flexibility to exit your contract for cause.
3. Negotiate Price Protection – Most cloud contracts are subject to rate changes as well as automatic price increases which can range from 5-10% annually.  It’s important to negotiate fixed pricing for the life of a cloud contract. The customer sometimes may need to offer a committed minimum spend, or payment upfront.  Also ask for fixed pricing to be included in the contract.  Like the SLA, if the cloud provider references an external pricing schedule, this can be changed on a regular basis without notifying customers.
4. Negotiate Termination Language – Customers are excited about getting their new technology implemented, and pushing the contract through the approval process as quickly as possible, but often overlook their options if they’re not happy with the product or service before the end of the contract.  Without specifically negotiating termination language, it will always be in the cloud provider’s favor.  Most often, when signing a cloud contract, the customer will owe the amount for the entire term regardless of how the contract is terminated.  By spending time negotiating termination language into a cloud contract, you create leverage and vendor accountability for the flexibility to negotiate other important things such as contract renewal, price, and other changes. At the very least it provides you with a way to leave a cloud provider with minimal risk to your company.
5. Negotiate Data Protection – The first thing to do after signing a cloud provider contract is to prepare to move data.  Often overlooked in a cloud contract is how your data is defined, treated, uploaded, protected, and ultimately recovered when a contract is terminated.  Specifically define things like what data is considered your company’s intellectual property, and if that data will be accessible in any way by the cloud provider.  You will be surprised to find that cloud providers sometimes use machine learning to read your data for their own analytics and marketing use.  When your contract is terminated, how will you recover your data, and will it be in the same format as when it was uploaded?  Will you need to pay for your data or satisfy specific contract terms before you can have your data back?