Cloud Contract Checklist

checklist, cloud, outsourcing.The cardinal rule is that before you sign a cloud-based outsourcing contract, ensure your contingency and disaster recovery plans are water tight. Mitigating risk is the responsibility of the end user as is extracting value from outsourcing contracts (with or without cloud-based elements).

Today, every outsourcing contract must have the following considerations:


  1. Short-term Outsourcing/ Cloudsourcing. A short-term contract is essential as business demands will vary, changing the amount you Cloudsource (as a total of the outsourcing contract) as well as the nature of what you Cloudsource.
  2. Insulation from changes in delivery of Cloud services resulting from acquisitions and mergers. The cloud eco-system innovation is being led by small, agile and widely differing companies. These companies are frequent targets of acquisitions. Acquisitions can lead to major changes in provider-customer relationships, and the changes aren’t always in your favor so you must protect yourself.
  3. Balance between pay-per-use models and billing based on service consumption slabs. Fluctuations in business can result in major spikes in cloud-based service consumption. This means there is some benefit in pre-negotiating slab-based pricing. This means as your consumption of the cloud services grows, each slab delivers increasingly favorable pricing.
  4. Option to take additional volumes to a different provider. Moving additional volumes to a different provider may not always result in a cost saving. Changes in the business environment may demand that you lower the risk to your business by opting for multiple providers.
  5. Visibility into operations, management and governance. Traditional outsourcing contracts ensure that customers have adequate visibility into and control over operations, management and governance related to the outsourced service.  That is one reason most organizations are comfortable with outsourcing a number of complex processes and infrastructure. However, your contract with the outsourcing partner for cloud-based elements must baseline the operations, management and governance standards.
  6. Security standards as good as those for outsourcing sensitive business processes. With critical workloads, applications and data storage migrating to the cloud, your contract should ensure extremely high levels of security. In the event that security standards are not met, opt for a private cloud where it is easier to set up the security layers your business demands.

Outsourcing has changed dramatically. Before you ink a contract, ask yourself this question: was my RFP designed to attract services providers who truly understand cloud? If you answer “yes,” you can expect a contract to deliver what you want.


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