Cloud Contracts: Six Items CIOs Need to Know Before Signing

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Contract Termination/Data Ownership

The termination procedure between a client and cloud service provider must be clearly spelled out in the contract and understood by both parties. Additionally, the provider should make the client's data available for a specific amount of time before it is removed from the cloud infrastructure. On average a provider may keep data and applications for an additional 30 days after a contract ends to provide the client with enough time to transfer it to a new system. After this time period, it is common practice for the provider to delete the information and repurpose the infrastructure resources for another client.

Cloud-based infrastructures and applications are part of almost every company's IT architecture. With each cloud service provider relationship, the CIO must carefully read, negotiate and sign a contract outlining service-level agreement (SLA) performance, security, data privacy and ownership, data sovereignty compliance and termination procedures.

A shared understanding of the client's needs and the provider's capabilities and offerings is critical to a successful relationship. Accordingly, it is essential that CIOs purchasing cloud services be able to clearly educate the provider on the company's needs, history with cloud, relationships with other providers and reasons for seeking this infrastructure. The provider can then best deliver a package of services to meet these requirements.

During contract negotiations, the provider often offers further education on how to create a comprehensive plan for using cloud services as well as detailed insight on the topics of security, data access and general risk. This is important as there are still misconceptions about cloud services, such as what happens to information once it leaves the client's data center. This symbiotic information sharing will lead both parties to a more meaningful agreement when reviewing the services contract, especially as it relates to the following six key items, identified by Mark Kristiansen, SVP and general counsel, Dimension Data Americas, that are usually the most contested.

About Mark Kristiansen

Mark Kristiansen is Dimension Data Americas' senior vice president and general counsel. He manages the legal affairs for the Americas, overseeing risk and compliance, corporate governance, mergers and acquisitions, litigation, contracts, employment and labor, as well as intellectual property issues. Mark joined Dimension Data in 2001 after the company acquired Proxicom, where he held a similar role. He received his Juris Doctor from the College of William & Mary School of Law in Williamsburg, Va. Mark received his B.A. in Spanish literature and Political Science from Brown University. He is admitted to practice law in Maryland and is a member of the American Association of Corporate Counsel.


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