4 risks of cloud computing contracts

Cloud computing has grown in popularity recently, but it’s still relatively new, and some kinks need to be worked out in the way services are delivered.

Cloud computing done right can bring big cost savings for IT. But contracts and deals must be closely examined so shortcomings can be addressed.

Here are the biggest risks, according to a recent Gartner report:

  1. Cloud contracts aren’t mature for all markets — Some cloud services have been around longer than others, and providers venturing into newer areas may not have figured out how to handle the security, performance and other needs required by most businesses.
  2. Contract terms generally favor vendors — The way cloud services are structured makes it difficult to customize contracts based on customers’ needs. That can often result in standardized contract terms that better serve the vendor’s interests. And there may not be room for much negotiations, so companies should adjust their expectations accordingly.
  3. Contracts are easily changed by the vendor — Cloud service contracts are often long and confusing, making it easy for some vendors to change terms without all of their customers noticing. Business must completely understand all terms of the contract before signing it.
  4. Contracts don’t have clear service commitments — One key weapon IT has in dealing with a cloud provider is a service guarantee. But too often, service guarantees are vague and don’t include any real penalties for the vendor. Businesses should make sure those terms are acceptable before entering into an agreement.

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