IT procurement or sourcing managers challenged with finding sourcing options that reduce costs at tolerable risks should examine nine contractual terms to reduce risk in cloud contracts, according to Gartner, Inc. The cloud delivery model is gaining popularity, but it includes risks that are often unclear or overlooked when assessing the appropriateness of the sourcing model.
"Cloud solutions often appear to have lower initial and switching costs than traditional solutions, but include hidden costs and risks, and require unique terms for contract protection, compared to traditional arrangements," said Alexa Bona, research vice president at Gartner. "Many cloud providers appear reluctant to negotiate contracts, as the premise of their core model is a highly leveraged approach. The starting point contractually often favors the vendor, resulting in a potential misalignment with user requirements."
When assessing cloud offerings' procurement and sourcing, executives need to understand what can be negotiated relative to risk elements, what they need to pressure cloud providers to offer, and what will likely not be negotiated.
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IT Procurement Best Practices to Reduce Risk in Cloud Contracts
