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As cloud adoption accelerates and a more diverse group of organisations consider it, the contracts that underpin cloud-based services need more expert attention.

Lack of Understanding

Small and medium-sized enterprises (SMEs) are agreeing contracts without understanding what they are committing to. The ease with which cloud services can be implemented and used is luring businesses into accepting contracts without the right oversight and contingency plans, and this is putting them at risk. It is even possible, if standard contracts are not changed, for a company to have its contract terminated and data deleted for late payment.

Contracts like this gives the provider the right to terminate your service and erase your data if you are 15 days late in payment. It’s questionable whether they would take that action after 15 days, but the risk is there unless the agreement is modified to address it.

Businesses need to clarify

“SMEs are accepting without thinking, which scares the hell out of me,” says Bob Fawthrop, a seasoned IT outsourcing consultant and director at Bob Fawthrop Associates. “Businesses need to understand the associated risk because they will be fined if data is lost.”

There is increasing pressure on large and small businesses to “cloud up”, and it is not surprising that many rush into agreements. “I could easily imagine an organisation without tight contracting controls, or without cloud deal experience, just jumping into these agreements in the interest of saving time,” Fawthrop tells computer weekly.

Part of the problem is that cloud is still a new model for many, including large organisations, and it is essential that decision makers understand what they are agreeing to.

Further Reading

For the full report, please visit http://www.computerweekly.com/feature/Cloud-contracts-are-still-a-minefield