Sourcing the Cloud – Part I

The Software-as-a-Service (SaaS) delivery model promises fast deployment speeds, lower upfront costs and ongoing flexibility to scale up or down as business needs change.

With SaaS, those benefits promise to be universal, whether applied to Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Email and Collaboration, Asset Management or IT Service Management (ITSM).

Whilst the benefits may well promise to be universal across all of the SaaS deployments within an organisation, what is often not universally available is a single set of standardised terms and conditions (and Service levels) across all the SaaS deployments.

The nature of SaaS solutions generally, is for a specialist supplier to offer a set of functionality within a particular vertical solution space such as with CRM, Email or HR/Payroll. This approach provides organisations with access to numerous highly-functional ‘point’ solutions to solve immediate business problems whilst also delivering on the promised SaaS benefits mentioned above.

However, the approach also means that organisations are often faced with multiple sourcing decisions that result in the need to sign up for multiple offerings from different suppliers; and with the number of outsourcing contracts involving Cloud on the increase, there will be a growing focus on the contractual arrangements, especially as many Cloud suppliers present their clients with their own standard agreements.

Cloud contractsCloud contracts

Deloitte is continually reviewing Cloud services contracts on behalf of clients and finds that there are a number of new challenges being faced by organisations, with some of the issues compounded by the lack of adequate industry standards around terms and conditions.

Analysis of Cloud contracts in the market reveals there are considerable gaps in the terms and conditions that suppliers are presenting to clients, specifically around areas such as Security, Data breaches, Service levels, Data sovereignty and privacy, Disengagement arrangements.

In Part II and III of this series, we will look into each of the aforementioned areas and how, if not addressed adequately, they can weaken terms and conditions of Cloud services contracts.

Did you miss any of our previous Deloitte Source Point blog posts? Read them here.

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