Negotiating Tips On Software-As-A-Service Contracts

Negotiating Tips On Software-As-A-Service Contracts

More often than not, people don’t ask questions. However, when it comes to negotiating a SaaS contract, it pays if a customer asks. In general, a client mustn’t be ashamed to ask even the simplest question. With the increasing popularity of cloud computing, IT administrators and Chief Information Officers will often find themselves dealing SaaS solutions providers. According to Gartner, it expects SaaS revenues from around the world to reach $14.5 billion for 2012. By 2015, it expects the revenues to hit $22.1 billion. With the present move towards the cloud, customers must be wary about security and performance concerns. They must also consider establishing vendor management systems because of the expected proliferation of Software-as-a-Service providers.

Even before a customer initiates talks with a supplier, he must ask himself some questions so that he may be able to have a solid grip on the goals and needs of his company so that he can identify important matters to discuss with a SaaS supplier. In “Contracting for Cloud Services”, a book written by Thomas Trappler, he said that there are two basic questions that a customer must ask a potential cloud computing supplier: How business critical will the cloud service be to the business operations? How sensitive is the data that they will be moving to the cloud?

When the customer discovers that standard contract of the Software-as-a-Service provider doesn’t meet his organization’s needs, he must make it a point to discuss further his needs and ask the supplier to tailor fit the cloud computing service according to the business’s requirements. In some cases, the provider may not be able to meet all the customer’s needs. On the other hand, the THINKstrategies managing director, Jeffrey Kaplan, believes that service level agreement and contract negotiation really depends on the nature of the cloud computing application. Some SaaS available in the market today don’t even allow negotiating because a customer will just need to sign up online and pay for the services through credit card.

Small and medium-sized companies have limited negotiating powers. The only thing that they can negotiate is the price. SMBs would often find themselves giving up some of the functions or features in exchange to a cheaper price. In general, SaaS suppliers don’t really change the basic contract. What the customer can do is to scrutinize various SaaS contracts from many suppliers in order to decide which among the contracts best matches his business’s requirements. A customer must also exercise due diligence when dealing with small SaaS suppliers because such vendors may be acquired by a much larger company in the future and may, thus, change its cloud computing product direction.

A customer must also find out how the SaaS supplier will be able to link its product with existing business systems. The service provider must also be able to provide data migration and export/import tools in case the customer decides to switch suppliers in the future. After the terms of the SaaS contract are accepted, the vendor and customer must then discuss vendor and contract management. Aside from establishing and/or identifying staff resources to ensure that the supplier fulfills his contractual obligations, the customer must also ensure that a contract management system is established. In most cases, the purchasing and IT departments are tasked with the supplier selection and appraisal process while the legal department often evaluates broker negotiations and terms.

By Florence de Borja

Sorry, comments are closed for this post.

Comics

At CloudTweaks, we're plugged into the cloud, the internet of things and all that the web has to offer. From wearable technology, to mobile computing, cloud computing and big data, CloudTweaks is your source for updates and news on the most innovative technology.

Popular

Top Viral Impact

Cloud Infographic: The Education Of Tomorrow

Cloud Infographic: The Education Of Tomorrow

Cloud Infographic: The Education Of Tomorrow  Online Education is a very exciting topic for many as it opens up many new doors and opportunities. We’ve touched on areas such as Massive Open Online Sources (MOOC) which provides tremendous levels of cloud based interconnectivity. We’ve taken a look into higher education,  the increased demand for online courses as well as…

Are Cloud Servers The Right Choice For Your Business?

Are Cloud Servers The Right Choice For Your Business?

Cloud servers offer power, flexibility, reliability, and client friendly hosting for small and medium businesses that have outgrown shared hosting. New business hosting clients are bombarded with an incredible diversity of different choices for their site’s hosting. It can be a challenge to negotiate the range of platforms and the marketing hype that many hosting…

IBM and SAP Announce Industry’s Largest Cloud Deal

IBM and SAP Announce Industry’s Largest Cloud Deal

IBM and SAP Announce Industry’s Largest Cloud Deal IBM and SAP have shaken the cloud computing world this afternoon with the announcement of one of the largest cloud deals in the industry’s history – bringing together two of the largest technology companies in a bid to offer a more holistic service to their clients. SAP…

Cloud Infographic – Cloud Fast Facts

Cloud Infographic – Cloud Fast Facts

Cloud Infographic – Cloud Fast Facts It’s no secret that Cloud Computing is more than just a buzz term as that ship has sailed off a long time ago. More and more companies are adopting the uses and benefits of cloud computing while aggressively factoring cloud services spending into their budget. Included is an excellent…

5 Ways The Internet of Things Will Drive Cloud Growth

5 Ways The Internet of Things Will Drive Cloud Growth

5 Ways The Internet of Things Will Drive Cloud Growth The Internet of Things is the latest term to describe the interconnectivity of all our devices and home appliances. The goal of the internet of things is to create universal applications that are connected to all of the lights, TVs, door locks, air conditioning, and…

Featured Sponsors

Salesforce Service Cloud: Air Traffic Control For Your Customer

Salesforce Service Cloud: Air Traffic Control For Your Customer

Salesforce Service Cloud One of the greatest benefits of the increasingly reliable and ubiquitous state of cloud technology is the removal of business silos and the consolidation of information flow, both in-house and on the road. This is of particular importance to the many different types of professionals whose work involves customer relationship management (CRM).…

The Internet of Everything Opens Up The World

The Internet of Everything Opens Up The World

Shaping The World With New Technologies As a connected collection of intelligent objects, the Internet of Everything promises to open up those areas of the world hardest hit by economic, political and agricultural blights. Relatively inexpensive devices, paired with revolutionary energy sources and unprecedented access to information offer great promise to farmers and workers in…

2015 Advertising Opportunities - Find Out More!

Cloud Logo Sponsors

hp Logo CityCloud-PoweredByOpenstack-Bluesquare_logo_100x100-01
cisco_logo_100x100 vmware citrix100

Established in 2009, CloudTweaks is recognized as one of the leading influencers in cloud computing, big data and internet of things (IoT) information. Our goal is to continue to build our growing information portal, by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

Contact

CloudTweaks Media
Phone: 1 (212) 763-0021

Join Our Newsletter