IMGCAP(1)]Going to the cloud can be scary for some firms and what can be even more frightening is the legal mumbo jumbo and weird terms and conditions involved that movement.
Overall, these agreements will never be pro-you/client; they just won't. The best you can ask for is a neutral to realistic set of legal terms and conditions that show that the cloud provider has, of course, thought about their own needs but also protected you to give them the dignity and assurance they deserve.
Note: Please keep in mind that if you have signed up for a credit card, Facebook, online banking, iTunes, and/or a myriad of other clouds or services, you have already signed your life away and whatever cloud contract you are considering will likely be more favorable to you than any of those terms .
What's their SLA or SLP?
Short for Service Level Agreement/Policy (SLA/SLP), believe it or not lots of cloud vendors are extremely hesitant to provide a SLA. They say things like 'uptime,' (which is important) but that doesn't mean anything on whether or not they are going to call you back or respond to a service ticket. Lots of cloud companies need to scale in order to become profitable (and survive). Profitability hinges on their payroll costs, which is more expensive than technology much of the time. Thus, the biggest lever to pull on profitability-wise is personnel, which in a cloud company (with a service team) means slow response times. No SLA = No bueno!
What happens if the cloud vendor doesn't meet their obligation?
Lots of contracts in the cloud space include the words 'no guarantee' and/or 'no refunds,' translated to mean 'no love.’ Legally the vendor to can wipe their hands clean of issues they deem to not be their own and/or out of their control. While this makes sense for them to include in the legal disclaimers, it breaks down when an aspect of their cloud is the proposition that 'X feature' or 'Y application' will work in their cloud.
When X or Y doesn't work as it was sold, they don't owe you a thing in return despite their slick marketing and sales pitch. A provider who has a contract where there is no obligation to deliver according to a SLA, application availability/functionality and uptime basically absolve them of any accountability.
Are you paying in advance for a discount?
In some cases a cloud vendor will ask for 12 months of fees up front in exchange for a steep discount. Sounds like a good deal, right?
Many times the client finds out their technology doesn't work as it was sold to them. What this now means is they have paid for technology that they can't use and/or can use to their own detriment. If the terms are written as referenced in the previous point, it makes it hard for the customer to find any 'win' in the resolution of the problem.
What's their uptime?
If a provider guarantees 100 percent uptime and 95 percent application availability, what is their uptime as far as you are concerned? It’s 95 percent. Who cares about a car that doesn't have any gas in it and/or technology that can't function? So watch out for this. They will go high with uptime because that is the token reference number, only to pull the rug out in some other slick way.
Other vendors in the mix?
In some cases the cloud vendor you are considering actually isn't using their own technology but reselling someone else's cloud that allows for a 'white label' option. It is important to consider this when you sign a legal agreement because you do not know, in essence, who you are signing an agreement with. Ask the cloud vendor you are considering if they are the actual company serving up the technology you will be using.
In Summary
These are the typical “gotchas” in a cloud contract to be aware of. Going to the cloud should not mean you go without assurance however, you should expect an agreement that protects the cloud vendor's business interests. If you find a company that meets your needs yet fails to assure, it is best to keep your search alive.
Roy Keely is the vice president of market strategy at Xcentric, a company that specializes in cloud computing and IT consulting for CPA firms. He offers a broad range of experience in marketing, sales and consulting and is passionate about technology, productivity and market strategy. He can be reached at
