As cloud computing continues to expand – both in scale and complexity – intermediary tech vendors are looking to simplify their customer contracts, shorten negotiations and reduce time to value. This article makes the case for shorter, simpler IT contracts and gives you 10 tips to get there.
Fuelled by the internet and the cloud, we’ve seen a shift away from perpetual, intermediated, on-premises software licensing and towards the subscription-based, direct, cloud-enabled software as a service model.
All this, coupled with regulatory developments like GDPR and the incoming wave of European digital markets rules, has lead to increasing complexity and page count for typical cloud tech contracts.
This extends time to negotiate and pushes back time to value.
At a time when customers are ‘optimising’ tech spend, tech vendors are increasingly asking us what they can do to make their customer contracts shorter and simpler but still protect them.
Here are our top ten tips:
- Engage early with the customer on the contract so the documents don’t take them by surprise in the days before you want to sign.
- Make sure the customer understands what you – the partner – are providing and what the Cloud Service Provider (Microsoft, AWS, Google, etc.) is providing.
- Make sure the customer understands how the CSP’s contracts work – and that you probably won’t get much change off their standard terms.
- If there are any dependencies on the CSP’s terms, make sure the customer understands this early on.
- Make your contracts accessible and easy to understand. The message should be: “I’m easy to read. This is what you’re getting for what you pay. This is what we’re doing for you. And this is what we expect from you in return.”
- A long contract is not necessarily a good contract – get the language tight, simple, short and clear.
- Customer expectations around GDPR and cyber risk are rising. Negotiating them takes up more and more time, so getting them right at the outset is at a premium and will save time.
- Make sure your liability clause is market. What’s the level of the general cap? 12 months’ fees for example? Will there be a super cap for GDPR, confidentiality and cyber security? Is consequential loss excluded? Is the customer’s liability capped? Are indemnity claims capped? Are the caps separate?
- Include a relief event regime – failure by the customer or anyone else to do what they said they do should relieve the provider from performance, at least to the extent of the failure.
- Finally, the best is the enemy of the good in contracting – it’s all about practical real-world risk management.
