Consistency, clarity and transparency must lie at the heart of contracting with Cloud Service Providers

21 Jun, 2012

Best Practice Guide to contracting available from the Cloud Industry Forum


A practical guide to contracting cloud services has been launched by the Cloud Industry Forum (CIF) in response to clear market demand for clarity and advice when procuring from a Cloud Service Provider (CSP).


The White Paper – downloadable at – encompasses a range of issues including contracting, liability, data location and ownership, SLAs, insurance and acceptable use policies as well as practical legal advice provided by DMH Stallard.


Andy Burton, Chair of CIF and CEO of Fasthosts, stated: “As with all new markets, there are entrants who are credible, well-intentioned, capable and professional and there are also unfortunately those that are looking to make a quick profit and whose public claims will not 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 service agreements, this experience is to some extent, muted in impact as many have adopted the behaviour of just ticking the ‘I Agree’ box and move forward in the process without reading the small print,” he added.


“This raises two critical issues: how do I as a customer tell the difference between a capable or a rogue supplier, and how should I contract for services with a Cloud Service Provider?”


The Forum has addressed the first issue with the launch of its Code of Practice, which is designed to provide a normalised view of all credible CSPs so that end users can take an educated decision. This White Paper is designed to give insight and clarity on how to contract and gain insight into vendor capabilities and commitments.


Research from the Cloud Industry Forum has highlighted a number of key areas of confusion and uncertainty amongst end users and resellers as to the nature of the contractual agreements they have entered into.


These include:


  •  Automatic contract renewals are in place with 48 per cent of the 218 end users questioned a figure that increases the smaller the organisation is
  • Greater protection and assurance is being sought by 8 in ten consumers of cloud services as a result of issues and concerns such as data security and data ownership
  • Liability for data loss is also a concern amongst many end users. According to the research findings over a third – 34 per cent – of CSPs exclude liability for data loss in their contracts, 29 per cent include and yet 37 per cent of the sample of end users had no idea
  • Almost three quarters of cloud users are content that their contracts with their CSPs do not allow their provider to take ownership of their data or intellectual property rights.  When asked 54 per cent of the same sample believed that their provider would only hand over their data to a third party if forced to by Court order.
  • 45 per cent of those questioned did have in place a plan to migrate to another provider if the service is interrupted or terminated, while 43 per cent do not
  • Furthermore only 43 per cent of the sample had insurance in place in the event of an interruption to the business if a disaster strikes



“We have argued for some time that as there is a lack of common standards in contracts – and without restricting commercial advantage – the industry as a whole would benefit from adopting best practices which can be shared and embodied in CSP contracts, to provide clarity on key issues of concern for end users,”


“CSPs have an opportunity to achieve competitive advantage by being both easy to do business with and by being straightforward. Clarity of obligations, service levels, service options and issue resolution will positively reduce risk for end users in making their supplier choice decisions,” concluded Andy.


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