The brief
- Plan the exit before you enter. Egress fees, export formats, and proprietary dependencies decide how hard it is to leave later.
- Treat renewal as a negotiation, not a formality. Look for auto-renewals, uncapped uplifts, and notice windows that close 60 to 90 days out.
- Read the SLA for what it excludes. Uptime headlines matter less than how downtime is measured and what the remedy actually pays.
- Size commitments to real usage. Committed spend only saves money if you use it, so ask about rollover and scaling down.
- Know whose interests you’re hearing. Vendors and resellers have a stake in what you buy.
Cloud contracts are simple to agree to but difficult to cancel. If you ask the right questions about the cloud contract before you sign it, you can guard yourself against unexpected price increases, exit fees, and SLA credits which never make up for the actual damage. By the time a problem appears, the advantage will have moved to the vendor.
Below are five questions that deserve to be included on every procurement checklist. The pricing page seems simple but the order form does not. The solution isn’t a more extensive legal review; instead it’s about asking better questions from the beginning.
The five cloud contract questions to ask
1. How much does it cost to leave?
It is the case that most teams negotiate the cost of entry whereas few negotiate the cost of exit.
Inquire as to the fees involved in data egress, the export formats available, and how long access to your data will be maintained after the contract has been terminated. Also find out if your workloads rely on proprietary services for which there are no alternatives elsewhere. A contract that is cheap to begin but expensive to exit is an example of a lock-in strategy, not a discount.
Warning: The vendor is unable to provide you with a clear, written description of what the exit looks like.
2. What takes place at renewal?
It is in the renewal clauses that a great deal of the small price increases are found. You should check for auto-renewal provisions, annual price rises, and notice periods which close 60 or 90 days before the term ends. If you fail to meet that deadline you could end up paying another year at the higher rate.
When you sign the agreement, put the notice deadline on the calendar and request a limit on the renewal increases.
Warning: The use of uplift language referring to ‘then-current pricing’ without specifying a cap.
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3. What actual guarantees does the SLA provide?
A commitment to 99.99% uptime may seem like a safety net, but on closer examination the detailed terms usually include less than one might assume.
Look into how downtime is measured, which outages are excluded, and what the proposed solution is. In a great many of the agreements the remedy provided is a service credit rather than compensation for the financial loss caused by the outage. Such credits usually have to be claimed within a short time frame and they seldom take into account the actual impact.
Warning sign: The service level agreement has very generous figures stated at the beginning and includes a long list of exceptions.
4. Are we agreeing to more than we shall actually use?
Obligatory spending can give you actual discounts but may also result in you being charged for capacity that you never use. Before you agree to sign the contract, compare the commitment with your actual usage, not the optimistic forecast presented at the planning meeting.
Find out what occurs if you reduce your usage, whether any unused commitment carries over, and whether you can decrease your allocation halfway through. Also find out how the true-up process works if you use more.
A red flag is when the amount committed is based on the vendor’s sales target rather than on your real workload.
5. Who is with us at the table?
This is the question that is asked the least and might be the most important one.
The individual who walks you through the contract is generally acting on behalf of the vendor or a partner who makes a profit when you purchase. This does not imply that they are dishonest, but it does mean that their interests differ from yours. Decisions can be influenced by marketplace listings, reseller bundles, and ‘preferred’ options before you have compared other alternatives.
Since an independent advisor has no interest in the particular vendor you choose, the vendor-neutral model is based on the idea of being on your side of the table, comparing AWS, Azure, Google Cloud, and the other options against your requirements, and then recommending the one that is most suitable, even if that is the vendor you are already using.
Warning sign: Advice that invariably ends up pointing to a single provider.
Where Cloud Latitude fits
For seven years Cloud Latitude has been working on the advisor side of the table, having guided over $2 billion of IT spending with 100 per cent client retention; clients generally achieve savings of about 30 per cent on their current IT spending, not just on their cloud spending, and our advisory services are provided free of charge to you.
No matter whether you are weeks or months away from signing or from a renewal, please send us the contract before you go ahead with it; having a second set of eyes go through it costs nothing and can make a difference.
Talk to an expert today.
