January 11, 2012
Cloud products like Software-as-a-Service can significantly improve a company's efficiency and flexibility while reducing costs, but it's vital for enterprise cloud adopters to fully understand their contracts with service providers.
In a recent Forbes blog post, IT expert Ray Wang explains the most common mistakes businesses make when signing cloud contracts and the best practices in examining contract language.
According to Wang, there's a misconception that SaaS and cloud contracts are simple, and companies often lack experience negotiating software contracts. Wang says the most common mistake during a contract negotiation is instinctively including support costs with the contract.
"While Cloud/SaaS contracts automatically bundle maintenance and updates into the subscriptions, customers often do not realize that they do not have to buy support," Wang explains. "This option can always be added at a later date."
The report said common mistakes also include failure to secure future discounts in anticipation of more usage and ensuring the contract can potentially be scaled down without incurring penalties.
Improving knowledge regarding service level agreements could become more important for enterprises, as many experts predict cloud computing will expand this year. According to a recent TechTarget report, 24.1 percent of companies expect to increase their cloud expenditures this year.
-McAfee Cloud Security