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9 tips for the Best-In-Class cloud agreement

It is nowadays impossible and impractical to avoid the cloud. Whether your company is listed on the stock exchange or a growing SME company: you probably have implemented a cloud solution or are considering doing so.

1. PLEASE NOTE THAT YOU CAN EXTEND AND REDUCE SERVICES

Many cloud agreements allow you to purchase additional users or services if your need increases. But it is also important to know what the possibilities are with a decreasing use. Most cloud agreements assume a predetermined annual amount of users, services and capacities. Take into account the possibility that you will have to deal with 'shelfware' and / or 'shelf services'. That means: software or services that are little or not used. It is therefore good to ensure that you not only have the contractual rights to expand the use, but also to reduce it!

2. PAY EXPENSES AND EXTENSION IN CASE OF REDUCED USE IN ADVANCE

If your cloud agreement allows you to purchase additional users or capabilities, make sure that the prices and fees for such additional users and abilities are clearly stated in the contract. And if you agree to a prepayment schedule, please also request a refund or discount in advance if future use decreases. Without these certainties you will certainly have to deal with numerous gradual and non-budgeted increases in prices and fees.

3. PREVENT THE SUPPLIER OF YOUR SUPPLIER IN THE FUTURE

Cloud agreements are subscriptions that need to be renewed if your organization wants to continue using these services and functionalities. Once a cloud solution is operational, it is difficult, if not nearly impossible to not extend. After all, this would require a lot of resources, time, transitional planning and implementation of the migration. And last but not least, a special piece of management (change management) to guide that change. Cloud suppliers know this and are happy to make you dependent.
The best way to avoid dependence and the risk of vendor lock-in is to negotiate your renewal terms (the installments after the first installment) with corresponding prices prior to signing the first deal.

4. EXTEND YOUR CONTRACT PER YEAR

Most cloud suppliers want you to sign contracts for several years. After all, an extension with several years means several years of extended bookings that generate income. We advise companies to negotiate renewals in steps of one year, because this ensures the right options and mentality of your cloud provider, which you now have to earn each year as a customer.

5. PRICE IN ADVANCE FIXED PRICES FOR MULTIPLE YEARS

Most providers will submit a certain price increase to you after the first renewal term. This can be done, for example, in the form of an increase of a fixed upper limit of 2% of a price index. If you do not set a price increase or upper limit in advance, you are often exposed to undesirable price increases. Uncertainty about price agreements makes you more vulnerable in the medium term and if it needs to be extended. We advise companies to stipulate in advance that prices are not increased until three years after the first extension.

Example:
The first term of a contract lasts three years. Prices and fees that apply for the first term must also be applied for the next three annual installments. In fact, you ask your cloud provider to invest in the relationship by giving you the same discount that was also used to win the order from your company. After this period of flat prices, we recommend that contractual price increases be contractually limited to the price index or another measure. If it is equipped with an upper limit, limit your cloud provider in its efforts to calculate fees for alleged lost earnings.

6. MAKE SURE YOU CAN TERMINATE CLOUD AGREEMENTS WITHOUT FINE OR COSTS

9 tips for the Best-In-Class cloud agreement - Start saving on your purchase projects now - Contact Buyers United directly!

It is nowadays impossible and impractical to avoid the cloud. Whether your company is listed on the stock exchange or a growing SME company: you probably have implemented a cloud solution or are considering doing so.

1. PLEASE NOTE THAT YOU CAN EXTEND AND REDUCE SERVICES

Many cloud agreements allow you to purchase additional users or services if your need increases. But it is also important to know what the possibilities are with a decreasing use. Most cloud agreements assume a predetermined annual amount of users, services and capacities. Take into account the possibility that you will have to deal with 'shelfware' and / or 'shelf services'. That means: software or services that are little or not used. It is therefore good to ensure that you not only have the contractual rights to expand the use, but also to reduce it!

2. PAY EXPENSES AND EXTENSION IN CASE OF REDUCED USE IN ADVANCE
If your cloud agreement allows you to purchase additional users or capabilities, make sure that the prices and fees for such additional users and abilities are clearly stated in the contract. And if you agree to a prepayment schedule, please also request a refund or discount in advance if future use decreases. Without these certainties you will certainly have to deal with numerous gradual and non-budgeted increases in prices and fees.

3. PREVENT THE SUPPLIER OF YOUR SUPPLIER IN THE FUTURE

Cloud agreements are subscriptions that need to be renewed if your organization wants to continue using these services and functionalities. Once a cloud solution is operational, it is difficult, if not nearly impossible to not extend. After all, this would require a lot of resources, time, transitional planning and implementation of the migration. And last but not least, a special piece of management (change management) to guide that change. Cloud suppliers know this and are happy to make you dependent.

The best way to avoid dependence and the risk of vendor lock-in is to negotiate your renewal terms (the installments after the first installment) with corresponding prices prior to signing the first deal.

4. EXTEND YOUR CONTRACT PER YEAR

Most cloud suppliers want you to sign contracts for several years. After all, an extension with several years means several years of extended bookings that generate income. We advise companies to negotiate renewals in steps of one year, because this ensures the right options and mentality of your cloud provider, which you now have to earn each year as a customer.

5. PRICE IN ADVANCE FIXED PRICES FOR MULTIPLE YEARS

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