5 Cloud Contract Traps To Avoid - InformationWeek
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1/27/2015
08:06 AM
Joe Stanganelli
Joe Stanganelli
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5 Cloud Contract Traps To Avoid

A cloud contract is just that, a contract. As such, it carries with it all of the normal pitfalls of a contractual relationship -- and a few specialized ones. Here's how to identify and avoid the risks.
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Going to the cloud makes things easier, right?

Then why is it so complicated?

Cloud computing contracts are often full of traps for the unsuspecting customer -- traps that can compromise data and expose said customer to fines, lawsuits, and other problems.

These traps hurt not just cloud customers but the entire cloud industry. Organizations in highly regulated industries (such as healthcare and finance) are notoriously nephophobic because of the massive legal liabilities they face for data compromises. They fear handing control of their data (let alone encryption keys) to cloud providers -- and often for good reason, unfortunately.

Many cloud providers like to advertise that they are HIPAA-ready, or use other puffery-invoking the names of whatever regulatory scheme their target demographics are subject to, but they might fail to comply with these legal standards for which they boast they are "ready" or "certified." For example, the vast majority of major cloud storage providers are not SEC-compliant. Many providers offering services for some industries have never even been independently audited against those industries' regulations.

[ Where do cloud service level agreements let you down? Read Cloud SLAs: Improvements Still Needed. ]

Worse, not all cloud providers are clear about where and how data is hosted and protected, potentially opening their customers up to all kinds of unknown security and legal risks.

Fortunately, these problems can be easily guarded against using a little knowledge and insistent vigilance. Click through our slideshow for a small sampling of cloud contract pitfalls and how to avoid them. The overall takeaway is this: Cloud customers always should assume Murphy's Law is in play, and negotiate cloud contracts accordingly.

Joe Stanganelli is founder and principal of Beacon Hill Law, a Boston-based general practice law firm. His expertise on legal topics has been sought for several major publications, including US News and World Report and Personal Real Estate Investor Magazine. Joe is also ... View Full Bio

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anon5401724375
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anon5401724375,
User Rank: Strategist
2/5/2016 | 11:26:35 AM
Re: Make sure you can export all your data
Great points - couple of more to consider based on our experience

How easy it is to transition out of a cloud based platform when you decide to switch to another vendor?

What happens to your data?

How easy is it to retrieve your data?

Something else to consider - better contract management software. Most cloud contracts are set to auto renew. It is extremely important to ensure that contracts are managed in a consistent manner. Autorenewals are huge budget drains especially if you are not using the platform. Renewals should be carefully monitored and addressed. We use ConvergePoint Contract Management Software to do this. It has been very effective for us. 
Charlie Babcock
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Charlie Babcock,
User Rank: Author
1/28/2015 | 7:46:39 PM
That's good, and I'll raise you five
These are good tips in a legal sense. But we're still falling short of meaningful cloud SLAs if we don't have a way to measure the service that we're getting. What's a virtual CPU in a particular service? How does it compare? What performance level is guaranteed by the provider if I'm on a server with noisy neighbors? Signing up for a big virtual CPU won't do much good if it spins away, waiting for I/Os to occur. Anyone want to come up with five more traps?
asksqn
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asksqn,
User Rank: Ninja
1/28/2015 | 6:57:28 PM
Awesome
These tips are tremendous resources.  Thanks for writing them.
anon0288352848
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anon0288352848,
User Rank: Apprentice
1/28/2015 | 9:06:18 AM
Make sure you can export all your data
If the cloud platform uses algorithms or data structures not under control of the customer, it's vital to make sure you can export what matters to you in a format you can use outside that platform.  If you don't define and test methods for exporting your content, you could face big issues should you cease using this cloud provider for any reason.

 
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