2. Presenter Background Adam Mansfield Director of Services,
UpperEdge, LLC UpperEdge Overview Bio IT Sourcing and Commercial 10
years experience within the contract Advisory Firm negotiation
profession Provides strategic advice, Specializes in the sourcing
and relevant insight, and precise negotiation of cloud, enterprise
market intelligence to IT and software and services agreements
strategic sourcing executives Advised Global 2000 companies on over
Sole objective is to ensure our 80 cloud, enterprise software and
clients establish high-value, services agreements best-in-class
relationships with their most important IT suppliers 2011 UpperEdge
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3. Agenda Cloud Computing Overview Growing Acceptance for Cloud
Computing Cloud Providers Objections to Negotiation How to Create
Leverage Contract Negotiation Issues and Tips Takeaways 2011
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4. Cloud Computing - Overview Cloud Computing is a model for
enabling ubiquitous, convenient, on-demand network access to a
shared pool of configurable computing resources (e.g. networks,
servers, storage, applications, and services) that can be rapidly
provisioned and released with minimal management effort or service
provider interaction Source: National Institute of Standards and
Technology (NIST) Special Publication 800-145, January 2011 2011
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5. Cloud Computing - Overview Hybrid CloudsDeploymentModels
Private Community Public Cloud Cloud CloudServiceModels SaaS PaaS
IaaS Broad Rapid Measured Network Elasticity Service
AccessCharacteristics On Demand Resource Self-Service Pooling
Source: National Institute of Standards and Technology (NIST)
Special Publication 800-145, January 2011 2011 UpperEdge | 5
6. Growing Acceptance for Cloud Computing Reduced deployment
cycles Access to innovation Flexibility / Scalability/ Agility
Lowered overall costs Freed up funds for other strategic
initiatives 2011 UpperEdge | 6
7. Cloud Providers - Objections to Negotiation We are unable to
offer Have you heard this before? custom contractual provisions
(i.e. service levels, renewal terms, audit rights, data
protectionsetc.) because we need to be in a position to offer a
scalable service to many customers in order to provide our low cost
solution. 2011 UpperEdge | 7
8. How to Create Leverage Competitive environment Perceived
competition and viable alternatives Replacing a competitors
offering (cloud based and on-premise) Market share is vital
Long-term/downstream revenue opportunities Revenue increases as
user counts and offerings expand Utilization of company name on
public client list Public recognition of adoption 2011 UpperEdge |
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9. Contract Negotiation Issues 2011 UpperEdge | 9
10. Pricing / Discounting Issues - Far from On-demand -
Multi-year deals with upfront payment - Shelfware Negotiation Tips
- Additional discounting for multi-year commitment with annual
upfront payment - Prices locked during the term - Ability to scale
up and down 2011 UpperEdge | 10
11. Renewal Terms Issues - Cost increases at the end of the
initial term - Auto-renewal language Negotiation Tips - Price lock
during first renewal term - Price increases should be capped for
subsequent contract renewals - Auto-renewal language removed 2011
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12. Data Protection Issues - Data ownership and access rights -
Data after termination - Use of data by the cloud provider - Backup
schedules and policies Negotiation Tips - Ownership of all data
maintained - Data returned and removed providers servers - Data
should not be use for providers own purposes - Clearly defined
backup schedule and policy 2011 UpperEdge | 12
13. Security and Audit Rights Issues - Limited security
provisions - Inadequate security breach remedies - Right to audit
Negotiation Tips - Access rights must be clearly defined - Location
of data needs to be known - Notice of a security breach within a
reasonable period of time - Periodic audits of data security
controls, processes and procedures 2011 UpperEdge | 13
14. Service Level Agreement Issues - Boilerplate agreements -
Penalties for system disruptions, provider performance, downtime
inadequately addressed - Key performance metrics are not defined -
Access lost when providers servers fail Negotiation Tips -
Measurement period for uptime needs to be clearly defined - Penalty
structure if uptime not achieved - Significant service credits that
escalate as downtime increases - Monthly reports on key
availability, continuity and performance metrics must be provided
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15. Termination Rights Issues - Ability to terminate for breach
- Obligations upon termination are ambiguous and/or inadequate -
Transition services not adequately address Negotiation Tips -
Unilateral right to terminate for convenience - Ability to
terminate for continuous failure to meet service levels - Clearly
defined transition services - Providers should not have the ability
to terminate and/or suspend services abruptly 2011 UpperEdge |
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16. Takeaways LOWER COSTS + QUICK DEPLOYMENT LIMITED RISK CLOUD
AGREEMENTS ARE IMMATURE DUE-DILIGENCE EVEN ESTABLISHED IS EVEN MORE
PROVIDERS IMPORTANT SOLUTIONS HAVE UPTIME ISSUES 2011 UpperEdge |
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17. Thank You Are you? UpperEdge Service About to embark on an
ERP Transformation Sourcing Advisory Service Project? Strategic
Advice on creating and implementing highly effective sourcing
strategies utilizing market intelligence Preparing to renew an
Enterprise Agreement Commercial Advisory Service with a Strategic
Supplier? Negotiation Strategy creation and implementation
utilizing knowledge of Supplier Business Practices and Pricing
About to receive Resource Rate increases from Benchmarking Service
your Services Provider? Provider Benchmarking utilizing a
comprehensive rates database and Mark to Market Assessments
Contact: Adam Mansfield [email protected] 617.412.4324 Check
out our Supplier Scouting Reports For strategic insights on IT
which provide unique insights into sourcing visit: market and key
supplier developments www.upperedge.com/blog
www.upperedge.com/insights 2011 UpperEdge | 17