Are cloud contracts driving away business?

Cloud computing providers are increasingly falling for bad habits – they are offering customers “standard form” contracts whereby they set the provider lays out the terms, very much like insurance companies do with their policies.

These contracts are somewhat problematic, as they levy all responsibility and liability onto the client making use of the cloud service. Whilst many small businesses may accept these contracts due to not having sufficient legal resources, large businesses have means and are extremely unlikely to take up a one-sided contract.

This contractual quandary could well hinder the process of cloud adoption, unless the providers address the matter, and soon. Large businesses have already taken the lead in rejecting cloud providers with such contracts.

Many of the standard form contracts are extremely basic and presented very much like software contracts whereby you must simply accept the terms in order to proceed, or else don’t accept – “take it or leave it”. Public cloud providers are the main culprits here, and for larger businesses, the lack of being able to negotiate the terms will lead to complete avoidance.

In order for providers to really flourish, they’ll have to offer custom contract solutions for large organizations and a better level of customer service. Customer service, as mentioned in this blog previously, has suffered considerable neglect. To get these large companies on board there will also need to be leeway for liability and service level agreement issues.

Organisations which may benefit from this most however are small cloud providers and those coming on the scene late. Latecomers will learn from established providers (such as Amazon Web Services) and therefore have a better understanding of how to devise a more effective sale strategy. Smaller cloud providers offering managed and cloud servers will most likely offer a tailored solution, thus attracting larger clients.

The cloud should not be affected by what is essentially a contractual dilemma; it is imperative that providers therefore adjust their services accordingly.

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