End users seek comfort on reliability, control, integration and security of hosted services
The cloud is creating a greater sense of capability and collaboration and compelling financial benefits which can, if not checked, drive contractual and operational ambiguity, according to the latest research issued by the Cloud Industry Forum and co-sponsors DMH Stallard.
The results of the major study was unveiled at a special event in London on June 14, attended by some of the leading experts in the industry.
The findings mark the third in its series of White Papers, which scope cloud adoption attitudes and trends amongst end users and the IT channel, point to a transformation in the way IT is procured. Furthermore, the research illustrates how diverse and fragmented it often is for both end users and the IT channel to contract cloud services.
Frank Jennings, Partner and Head of Commercial at DMH Stallard, stated:
“The research has highlighted that there is a limited understanding of cloud service contracts. There is no one-size-fits-all approach that can be taken unilaterally and service, geography and scope will all play a part on the shape of any final agreement. However, there is a need for clarity and transparency in all contracts on key issues that impact and concern end user organisations as set out in the Code of Practice, championed by the Cloud Industry Forum.”
Andy Burton, Chair of the Cloud Industry Forum and CEO of Fasthosts, stated: “In traditional markets there is often a practical path to establish relationships between parties such as a physical point of presence for the business supplying the goods or services, a track record or personal relationship to add trust between the parties and clarity of who is in charge and what can be delivered. Our research shows that end users are seeking comfort on reliability, control, integration and security of hosted services as they expand their IT infrastructure from on-premise to encompass online.”
“In the online world where the number of suppliers is growing at an astonishing rate, these traditional norms are eradicated and we are returned to the basic fundamental principle of Caveat Emptor – or Buyer Beware,” he added.
A sample of the key findings from the White Paper highlights that:
- Just over half (52 per cent) of end user organisations currently using the Cloud claim to have negotiated the legal terms of their contract with their Cloud Service Provider.
- A third (32 per cent) stated that their CSP can impose changes to their contract by posting a new version online. This figure rose to 50 per cent amongst resellers.
- Just under half – 46 per cent – of end user contracts are renewed automatically. This becomes a greater percentage the smaller the organisation. The larger the organisation or indeed if it is in the public sector, the greater the chance these are reviewed.
- End users are looking for far greater assurances in their contracts with CSPs than traditional service level agreements. This is more often about data and its location, security and ultimate ownership. When contracting for a Cloud Service almost eight in ten cloud users are looking beyond an SLA for comfort in the service to be provided.
- Two thirds of the channel sample are also looking for greater assurances – 72 per cent on data access and privacy controls, documented policies on data protection (61 per cent) accredited information management security (46 per cent) and the application of the laws of the country where the data resides on 44 per cent.
- 75 per cent of end users felt it was important that their data was stored by their CSP within the UK, EU or European Economic Union, a figure that increased to 82 per cent amongst SMBs.
- Almost three quarters of cloud users are content that their contracts within their CSPs do not allow their provider to take ownership of their data or intellectual property.
Please click here for the full report.
Frank Jennings added: “As with all new markets, there are new entrants who are credible, well intentioned, capable and professional, and there are unfortunately those that are looking to make a quick profit and whose public claims won’t pass the test of scrutiny. Coupled with this is the increasing prevalence of online click-through agreements, originally designed to make procurement easier,
However, after a decade of on-premise software End User License Agreements and web services agreements, this experience is to some extent muted in impact as many have adopted the behaviour of ticking the ‘I agree’ box to move forward in the process without the necessary caution of reading the small print.”
The Cloud Industry Forum has called on end users to always assume and maintain ultimate responsibility for decisions they make either on-premise or in terms of adopting Cloud Services, and good governance requires them to be clear on their choice, their back-up plan and their insurance cover.
Frank Jennings is Head of Commercial at DMH Stallard and specialises in technology and new media. He has advised clients such as ADA, on managed IT services, TriSystems, on software as a service /cloud computing and London Borough of Croydon, on the new IT system for their one-stop reception service. If you have any queries regarding cloud computing, please email Frank at email@example.com
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NOTES TO EDITORS
About the Cloud Industry Forum (CIF)
The Cloud Industry Forum (CIF) was established in direct response to the evolving supply models for the delivery of software and IT services that has expanded well beyond the traditional on-premise method to one that now embraces hosted and/or, pay-as-you-use Cloud solutions.
CIF’s purpose is twofold: To drive a common and public level of transparency about the capability, substance and best practices of online Service Providers (SaaS, PaaS, IaaS, Web hosting providers etc) through a process of self-certification to a Code of Practice. Second, this Code of Practice, and the use of the related Certification Mark on participant’s web sites, provides comfort and promotes trust to businesses and individuals wishing to leverage the commercial, financial and agile operations capabilities that the Cloud based and hosted solutions can offer. CIF is ensuring the integrity and governance of the self-certification process through regular random audits as well as investigating complaints from parties that challenge any specific participants self-certification status.
Our ambition is to bring business consumers and suppliers of Cloud and Hosted Services closer together in a trusted, sustainable and rewarding ecosystem.
About DMH Stallard
DMH Stallard is a law firm whose lawyers continue to lead thinking in the technology sector. We are proud to work with some of the most innovative and successful organisations in the country including major financial institutions, many TSE listed companies, private equity backed businesses and high profile public sector bodies.
With a first rated technology group, advising clients such as Three and Rackspace, our lawyers are our clients' first port of call on a broad range of operational and commercial services. Many team members have worked within the sector in both legal and commercial roles. Being familiar with the language of these industries and their commercial priorities helps us to quickly establish strong working relationships
and provide pragmatic commercial advice to our clients.
Our lawyers continue to lead legal and commercial thinking in the technology sector - you can see some of their views at our TomiLaw blog: view of Technology, Online, Media and Intellectual property issues and news - including cloud of course.