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January 17, 2013

Beware These ‘Gotchas’ in Your SaaS Cloud Contract

The most popular cloud service today is the ubiquitous Software as a Service (SaaS) model of delivering applications to business.

With entry barriers so low even tiny, unsophisticated IT shops can leap them, SaaS is especially popular with small- and mid-sized organizations.

The downside? Sharing an application in the cloud with all the vendor’s other customers is risky.

You should know the pitfalls and how to guard against them. Here’s help.

Share and share alike

Cloud services come in several flavors: software, platform and infrastructure. The biggest risks are in software provisioning because that’s where the rubber meets the road in both internal and external transactions.

In a multi-tenant SaaS environment, you’re sharing the database with all the other occupants.

This means you’ve got to be absolutely confident in your provider’s skill at not just writing code, but also protecting databases, designing a good platform and managing it competently.

And, by the way, you have absolutely no control over most of these things.

What control you have will be part and parcel of the contract you sign with the SaaS provider.

Again, this isn’t something that vendors often give you much control over. They prefer a “like it or lump it” approach to contract negotiations.

But if the opportunity to haggle over terms comes up, you’ll want to be ready to fill some of the potholes common in the SaaS highway.

It also never hurts to ask if you can get concessions. Even if you’re initially told the terms are non-negotiable, you can ask for more details or clarification.

If the terms don’t meet your needs, your best bet is to keep looking until you find an agreement that does.

Contract pitfalls and problems

The obvious issues are familiar to most IT pros: data privacy, information security, data jurisdiction, vendor lock-in, accessibility (for auditing) and compensation for failure to meet service-level agreements (SLAs).

But you should also check out these issues in your contract:

1.Integration: What other apps will the software need to work with? And how much help can you expect from the vendor? Know this before you commit and you’ll be able to estimate your integration costs (which can be considerable).

2.Find my software: It’s vital that you know who will be holding the software code in escrow in case something bad happens to your vendor. Find out how you’ll be able to access the code and where it is.

3.Who’s the vendor?
It’s critical not just to know whom you’re signing the contract with, but what will happen if that business is sold to someone else. Be sure you understand your rights if ownership of the SaaS service changes. Why? You could wind up in a business relationship with an inappropriate partner. It’s critical to know if you can end that relationship or not.

4.Down the upgrade staircase: One nice thing about SaaS, is not having to worry about upgrades because the vendor manages them. But what if an upgrade dumps a feature you depended on? Who’s going to make up for the lost feature?

5.Who’s the boss? Change control can turn a cost-cutting cloud strategy into a pricey boondoggle. Delve into the change control aspects of your contract — in particular, how backup and rollback are handled in your contract, if at all, and if so, what SLAs are offered to customers.

Editor-in-chief of the Information Technology Adviser Newsletter, Dave King writes for Progressive Business Publications. Visit PBP Newsletters to learn more about the company’s many publications.