Your cloud contract needs to look beyond renewal time

Use your contract to keep from being surprised when it's time to renew

So you've done all the right things in selecting your new cloud vendor. You went through a competitive bidding process, evaluated the bells and whistles offered by each vendor, identified the service that best meets your needs, got a great price for the first year, trained your staff on the new service, and mothballed your old in-house solution. A whole lot of work, wasn't it? Don't want to go through that again soon, do you? Well, if your contract doesn't effectively address the terms under which you can continue to use the service, then the cloud vendor may have you over a barrel at renewal time.

Avoid renewal surprises

Did the vendor offer you special introductory pricing for the first year? Maybe with a minimum volume commitment based upon the vendor's projected adoption rate? Great, but when renewal time comes around and your usage was a lot different than projected, and the vendor hits you with a much higher "list price". Not a good place to be. So do your homework, and take steps to assure reasonable and predictable costs beyond the initial contract period.

Take steps to ensure that your contract specifies the costs of both renewing the service and changing the amount of data or number of users covered -- up or down. Start by negotiating to include renewal price caps in the contract that would ideally be determined by whichever of the following is lowest:

* A Consumer Price Index. There's more than one, so it's important to specify which one applies.

* A set percentage; shoot for something in the 3% to 5% range.

To continue reading this article register now

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon