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Vendor Negotiations in A Cloudy World

Not only is Cloud and ‘As-a-Service’ a fundamental technology change, it’s also a fundamental change to the way IT Services are financed and paid for. At the recent ITAM Review Conference in London on the 13th and 14th June at The Kia Oval in South London I discussed the impact these changes are likely to have on vendor negotiations in a cloudy world.

Cloud is one of the trending issues within the IT industry, yet is still surrounded by uncertainty and currently perceived by some businesses to be a solution with more questions than answers. As with most things, when thinking about moving to the Cloud, there are some basic things to consider before you take the plunge.

The flexibility of the new “as-a-Service” software offerings is very attractive – in theory, we only use and pay for the software we want – what could be better? However it’s vital that the contract is negotiated to ensure this flexibility is real, and that the contract can flex up and flex down as business needs change. Preferential terms offered by Vendors for volume commitments may be attractive, however are only a benefit and cost saving if the services in question are actually used. We have all been enticed by what appears to be a “good deal” at the time, only to find ourselves thinking “now I’ve got it I really should start using it” a few months later.

As with most things the devil is in the detail, having in depth knowledge of your current software estate including current and future requirements is vital when it comes to sourcing the right software Vendor and solution to meet the changing needs of your organisation. Before signing any contract it is essential to consider a Best Alternative To A Negotiated Agreement to avoid getting caught out on termination period, data retention etc. It sounds obvious but when negotiating the terms, ensure you obtain the best price for both immediate and future usage requirements (to avoid any unexpected increased renewal costs etc). And don’t forget to ensure that if your usage decreases at some point in the future, you will only want to pay for the reduced consumption (after all flexibility is a major benefit of migrating to the Cloud, right?).

Major risks to consider include provision for what happens if your “As-A-Service” provider goes out of business – how easy is it to access and retrieve your data? Does the Vendor have robust data security/back up and business continuity arrangements to reduce operational impact on the business? Double licensing until migration is completed is a cost consideration which will also need to be factored in.

In summary, the Cloud can provide a more flexible and cost effective data management solution and improve the business bottom line – as long as you have done your research, know exactly what your current and future software needs are and ensure your negotiated agreement meets these objectives. If not, then maybe your existing on-premise solution is not so bad after all (if it’s not broken, don’t fix it!).

The complete presentation can be viewed here: Vendor Negotiations in a Cloudy World