Standard contracts increase with cloud products' maturity

Summary: Suppliers offering more standard contracts to provide benefits of scalability, and focus increasingly shifting to customer relationship to understand business needs, industry watchers note.

Cloud contracts significantly differ from the past, which used to ensure customer stickiness for a pre-defined period of time, Mayank Kapoor, data center and cloud computing industry analyst of Frost & Sullivan's ICT practice observed.

For one, cloud service provider Avaya, told ZDNet Asia that it now works with clients in defining and fully understanding their business needs in order to offer an appropriate solution.

The cloud space

"In the cloud space, with so many permutations on offer, we find ourselves working with our clients to define the most appropriate strategy for them, regardless of whose services are involved," Paul Chen, Asia-Pacific director of unified communications and technical operations at Avaya, said.

Richard Wern, senior director of regional cloud computing at Fujitsu Asia, agreed, that as clients become more informed about cloud computing, they have more concerns that they wished to address in their deployment just as scalability and adaptability. This has as well encouraged clients to take a stronger interest in the management of their cloud and IT infrastructure, he remarked.

Chia noted that standard contracts were increasing as products became more mature. The IT and communications lawyer likened it to cars where each maker offers various models, leaving little room for negotiation and changing contract terms, unless clients pay more to go bespoke.

Observers were responding to the views of IT leaders at the MIG Cloud Computing Executive Roundtable in Hong Kong last month, who advised getting legal advice to read the "fine print" in cloud contracts as firms could be subjected to dishonest sales tactics, hidden costs, latency and governance issues which could affect key IT projects. Clients face issues because they have signed cloud contracts without thorough technology and understanding, Kapoor pointed out. They have not put in adequate measures and clauses to ensure that service providers cover all their services and costs which have been promised verbally, she explained. Small and mid-sized businesses in particular, do not seek legal advice earlier signing cloud contracts and end up being caught in these issues, she added.

For instance, Singapore's financial institutions must consider the Monetary Authority of Singapore's proposed guidelines, he cited. The government body urges financial companies to "be aware of unequalled attributes and risks [of cloud computing] especially in areas of data integrity, sovereignty commingling, platform multi-tenancy, recoverability and confidentiality as then as legal issues just as regulatory compliance, auditing and data offshoring", he reiterated.

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