One of the greatest challenges that cloud technology brings with it is the need for developers, IT professionals, and companies to be more open in their interactions. Cloud computing, by nature, requires the interaction of various entities and, as this technology grows, interactions between various companies are becoming the rule rather than the exception.
Because of this, it is important to understand which parties, if any, are involved in your cloud computing services apart from your company and the vendor. Third parties can enter a cloud computing service in an outsourcing agreement. The cloud computing industry is also very fast paced and you may find that your vendor has been acquired by a larger company or merged with another cloud services business. Third parties can ensure that you are getting the best possible range of services from a variety of sources. However, since the introduction of other parties to a cloud service also adds risk, it is important to address third parties in your contract.
Outsourcing issues in your cloud services contract
When you enter a contract with a cloud computing vendor, it is important to get information on whether the vendor is outsourcing some of its services to another cloud computing company. For example, a well-known SaaS vendor runs many of its services at a third-party's data center using that third-party's IaaS services. These kinds of interactions can make cloud computing contracts difficult to navigate. In the best interest of the consumer, it is important to mitigate risk by ensuring that your contract contains the following provisions for your cloud computing vendor:
- The contract should identify and name any third parties involved in the services they provide.
- The third party vendor should be obligated to follow the same security standards and procedures as the cloud computing vendor.
- A plan for business continuity should be established in case of service failure by the third-party vendor.
- The contract should hold the vendor responsible for complying with all terms of the contract, regardless of the actions of third parties.
Outsourcing is not a bad thing. In fact, the whole concept of cloud computing is essentially a form of outsourcing itself. In fact, as the industry gets more complex we can probably expect to see a higher degree of specialization. Unlike today, cloud computing vendors will need to become much more specific with their services, which will necessarily mean that any cloud computing contract will include various parties.
What happens in case of an acquisition or merger?
The cloud computing industry is one of the fastest paced tech industries today. We are still on the ground floor of a technology that is growing in leaps and bounds. This means that, at least today, you can expect the business landscape to change dramatically at a very rapid pace. Just looking at the last year, you will find numerous examples of large companies (such as Skype, Success Factors, and Yammer) being
bought by the industry giants, and
mergers are quite more frequent than in other industries. While this helps the technology advance and the market grow, it can be a bit difficult to navigate when it comes to your cloud services contract.
A new owner may not be willing to continue with the same products or to accept the terms you had in the contract with the previous owner. To mitigate these risks, it is important to include language in your current contract that allows you to plan for a merger, bankruptcy, or acquisition of your present cloud computing vendor. A good way to do this is to establish that all parties and their successors (regardless of the process resulting in their succession) will be bound by the terms of the contract. To transfer those obligations and rights to a third party, they should first need the prior consent of the other party of the contract. This means that your current cloud services vendor will still be held responsible, even if the company passes into new ownership.
The Bottom Line
Many of these issues can be navigated safely with the help of a professional. Today, Cloud brokers are rising organizations in the Cloud computing industry. They basically connect cloud clients with cloud vendors. By managing multiple parties for you and finding the correct vendors for your company's needs, a cloud broker can reduce costs and help you navigate what is becoming an industry full of complexity.
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About the Guest Author:
Nida Rasheed is a freelance writer and owner of an outsourcing company, Nida often finds herself wanting to write about the subjects that are closest to her heart. She lives in Islamabad, Pakistan and can be found on Twitter @nidarasheed.
