By Frank Jennings

The research has highlighted that there is a limited understanding of cloud service contracts. There is no one-size-fits-all approach that can be taken unilaterally and service, geography and scope will all play a part on the shape of any final agreement. However, there is a need for clarity and transparency in all contracts on key issues that impact and concern end user organisations as set out in the Code of Practice, championed by the Cloud Industry Forum.

As with all new markets, there are new entrants who are credible, well intentioned, capable and professional, and there are unfortunately those that are looking to make a quick profit and whose public claims won’t pass the test of scrutiny. Coupled with this is the increasing prevalence of online click-through agreements, originally designed to make procurement easier.

However, after a decade of on-premise software End User License Agreements and web services agreements, this experience is to some extent muted in impact as many have adopted the behaviour of ticking the ‘I agree’ box to move forward in the process without the necessary caution of reading the small print.

Some key findings from this research are highlighted below:

1. Just over half (52 per cent) of end user organisations currently using the Cloud claim to have negotiated the legal terms of their contract with their Cloud Service Provider.

2. A third (32 per cent) stated that their CSP can impose changes to their contract by posting a new version online. This figure rose to 50 per cent amongst resellers.

3. Just under half – 46 per cent – of end user contracts are renewed automatically. This becomes a greater percentage the smaller the organisation. The larger the organisation or indeed if it is in the public sector, the greater the chance these are reviewed.

4. End users are looking for far greater assurances in their contracts with CSPs than traditional service level agreements. This is more often about data and its location, security and ultimate ownership. When contracting for a Cloud Service almost eight in ten cloud users are looking beyond an SLA for comfort in the service to be provided.

5. Two thirds of the channel sample are also looking for greater assurances – 72 per cent on data access and privacy controls, documented policies on data protection (61 per cent) accredited information management security (46 per cent) and the application of the laws of the country where the data resides on 44 per cent.

6. 75 per cent of end users felt it was important that their data was stored by their CSP within the UK, EU or European Economic Union, a figure that increased to 82 per cent amongst SMBs.

7. Almost three quarters of cloud users are content that their contracts within their CSPs do not allow their provider to take ownership of their data or intellectual property.

You can download the White Paper with the full study on the link below:

http://www.dmhstallard.com/cms/document/CIF_Paper_Three.pdf  

About the author

Frank Jennings is Head of Commercial at DMH Stallard and specialises in technology law and new media. He has advised clients such as Rackspace on their cloud service, ADA on managed IT services, TriSystems on software as a service/cloud computing and London Borough of Croydon on the new IT system for their one-stop reception service. Frank chairs the Cloud Industry Forum's code governance board and Legal 500 2011 rates him #1 for technology law. If you have any queries regarding cloud computing, email Frank at frank.jennings@dmhstallard.com.