Cloud computing is an evolving technology. Service providers continue to experiment with different models to make their offerings more viable, and limit the risk of service breakdowns. There are limitations to the technology itself that clients should be aware of when negotiating contracts. It might be worthwhile to give the fine print, tucked away in the supplementary URLs, an extra glance when choosing a cloud computing provider.
Research firm Gartner has identified the following four areas of risk that CIOs should consider
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Risk 1: Cloud computing contracts are still evolving
According to Gartner, cloud computing contracts provide fewer assurances of service compared to other service contracts. You might not obtain all the guarantees of service continuity and support that are standard with most service contracts. However, terms and conditions for private cloud offerings, suitable for larger organizations, tend to be more favorable.
Risk 2: Service customizations are still far away
Cloud computing services are provided in an assembly-line manner right now. The products offered are standardized, and customizations are difficult. You will not enjoy the same degree of customization and partnering that you have come to expect with other outsourced services.
Risk 3: Contracts are ‘opaque’
Gartner finds cloud computing contracts as somewhat ‘opaque’, that is, not easy to read. Many of the details of the service, including critical points such the SLA, are not included in the body of the contract, but lie tucked away in the supplementary URLs on the page. The terms offered are also liable to change, sometimes without warning. Best way to avoid this cloud computing risk is to study the contract thoroughly, and ensure that the negotiated terms and conditions remain valid until the end of the contract period.
Risk 4: Service guarantees are few
Cloud computing services operate across different networks. Cloud computing service providers are reluctant to offer guarantees of service on networks outside their control. The service guarantees offered by providers are therefore likely to be limited. It is a good idea to negotiate this area of the service level agreement aggressively, and ensure that provisions are made for withdrawal and re-negotiation in case of unsatisfactory performance.
Cloud computing comes with its risks. Organizations need not shy away from it altogether, but must treat it with due caution at this stage in its evolution.
This was first published in March 2011