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Contracting Issues

Negotiating contracts with the potential cloud vendors is complex but crucial for success in the cloud. While click-through agreements seem to make the work easier for low risk applications momentarily, organisations must consider opting for tailored contracts to ensure that all future applications to be hosted in the cloud are completely safe and devoid of legal issues. Some of the common issues that arise due to contracting pitfalls are:

(i). Vendor Lock-In

More than 75% of enterprises feel that moving to the cloud comes with some percentage of vendor lock-in. While the convenience to shop at one stop, draw a single tailored contract and the standardization of technology seem alluring, things may not look the same in the long run. Vendor lock-in hinders the path to rapid innovation and ultimately knocks down organisational health. Examining the exit options in the contract or opting for an open source cloud stack such as Open Stack may mitigate these problems.

(ii). Unilateral Termination

Standardized contracts from bigger cloud vendors may sometimes allow unilateral termination of the contract with a very small notice period. In such cases, the contract must outline the potential effects of the termination and ways to regulate them. The terms of post termination support must also be outlined in the legal contract drawn between the two parties.

(iii). Auditing Requirements

Does your cloud provider reveal the exact location of your data? Does your contract outline the procedures and technical solutions that are in place to protect data once it crosses the judicial boundaries? Cloud vendors transfer data from one location to another to balance load and avoid latency. As the data controller of the cloud, organisations must comply with the laws and regulations of the country where the service provider is located as well as with the location of data storage. Cloud auditing is the solution to ensure 100% compliance with all rules and legal requirements of the new environment.
Apart from these major issues, there are few other legal clauses that need the attention of the data controller while establishing a contract with a cloud provider.

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