Client off to the cloud - a contractor's checklist

Is your client thinking of moving to the cloud for part, if not all, of their business needs? While intrinsically a technical project, the migration to the cloud is increasingly driven by corporate and operational strategy, competitive advantage, customer service and cost concerns. So what typically starts out as an IT-driven exercise; often spills out into other areas that tech professionals might be expected to make judgements on, yet might not always know the relevant ‘pros and cons’ to.

The cloud service will no doubt play a key part in the operation and success of your client’s business. Arm yourself with the following checklist, compiled by Sue Mann of Cousins Business Law, to ensure such a goal is achievable, even if reaching to the cloud is left entirely in your hands!

1/Preliminary checks

Before you commit to a service, make sure that it will meet the requirements of your client’s business. Despite their growing maturity, most cloud services are standard offerings so there normally won’t be much room to adjust it afterwards.

Most critically for IT professionals, check that the client’s internal or main computer system meets the specification for the cloud service. Interoperability will likely come above the other ‘must-address’ technical issues you’ll need to understand on the client’s behalf, such as service standards, support and security.

2/Fees

Cost is one of the leading factors in the decision about moving to the cloud. Cloud services tend to be charged either on a standard monthly, quarterly or annual fee for a specified amount of use or a variable charge based on the amount of usage. In either case, check what add-ons your client may need, the additional costs involved e.g. for maintenance and support, and agree them at the outset.

3/Price hikes

A favourable initial price will not seem so attractive if subsequent increases are significant. With a short term fixed price contract, can you renew without a significant price increase? In a longer term contract, is there a cap on price increases during the term? Although you could move to a new provider, that is not always a practical option.

4/Security

Various aspects of security need to be considered - and not just online. Physical security of premises and vetting of staff used by the cloud provider should be addressed, as should technical security, especially around any transactions third parties via your client will make. You will also need to understand the data storage and processing needs of your client’s business.

5/Data protection

Your client’s business will retain obligations under the data protection legislation for ensuring that data your client transfers using the cloud service are secure and are not transferred in breach of that legislation. Your customer will largely be dependent upon the cloud service provider in this respect, so your preliminary checks and contractual safeguards backed up by ongoing checks will be important.

6/Disaster recovery and business continuity

Does the cloud provider have data storage and recovery procedures in place which will be sufficient to protect your client’s data and ensure adequate and prompt restoration in the event of loss or corruption of the data – whether as a result of some major disruption of the client’s business or that of the cloud provider?

7/Service standards

Does the contract include a comprehensive description of the service and service levels? Are these backed up by any form of assurance as to performance standards?

8/Software licence

Your customer’s business will be using software applications as part of the online service so will need an appropriate user licence either from the cloud provider or third party owner.

9/Content

Check that your client will be given advance notification of any proposed removal by the cloud provider of the client’s data from its server and whether your client will be indemnified for any loss to the business for any such action which is unreasonable. A cloud provider will usually exclude liability for content stored on its servers.

10/Termination and exit

Find out what will happen to your customer’s data when the contract ends. Without adequate provisions in the cloud computing contract you might find your client’s business locked into an unsatisfactory arrangement and in considerable difficulty if the cloud provider becomes insolvent.

And finally…
Cloud computing is a developing area with much to offer to business users. My advice is to be aware of the relevant issues, carry out proper preliminary checks, weigh up the potential benefits, risks and legal obligations and make sure that whatever is finally agreed in relation to the cloud service provision is recorded in a written contract.

Monday 4th February 2013