IT Leaders Forum: Legal expert offers top tips for negotiating a cloud deal

IT leaders must thoroughly research the market and try to pit providers against each other when negotiating a cloud services contract. And deep pockets can help as well. So said Alex Hamilton, director at technology and outsourcing legal firm Radiant:Law, who was speaking to delegates at yesterday's IT Leaders Forum.

"If you are going to negotiate a contract you need to bring a lot of money to the table. The answer for a small firm is almost always no," said Hamilton.

"You should also certainly be thinking about running a competitive process, as this is a wonderful way of creating leverage.

"Competition fundamentally changes behaviour, and if you want to get your terms negotiated, then this is your best bet," he added.

"Companies should also try to get some sense of the state of the market when going through this process.

"If you don't do this you can spend a year discussing points that a cloud supplier will never agree to, and projects will be put on hold when they don't need to be."

Hamilton went on to outline some real life examples of terms that can be found in cloud contracts. These all highlighted the fact that the contracts are heavily biased in favour of the supplier.

For example, the terms place sole risk with the customer, and often the supplier cannot be blamed for any outages or downtime in service.

"There are pretty scary terms out there, and we are always dealing with these kinds of contracts all the time," said Hamilton.

"The general position with these contracts is that if you sign a deal, you live by the deal. You should never assume that because a clause is blatantly unfair that it will not be enforced. Especially when it's a business-to-business contract," he added.

"However, it doesn't mean it's a bad decision to go ahead with a bad contract if it's a cheap service. If you have mitigation plans and other ways of offsetting the risk then that's OK. Don't expect to solve all your problems with a contract."