Thursday May 12, 2011

The Cloud Computing Prenup

When is cloud computing like marriage? A cloud consumer doesn't have to rent a tuxedo to enter into a relationship with a cloud services provider. There are no rings to exchange and no bouquets to toss. But at some point even the coziest relationship will hit bottom, and that’s when you discover that saving the relationship -- or getting out of it -- can be a lot more complicated than getting into it. So maybe we need to think in terms of a cloud computing prenuptial agreement. Charlie Sheen and Donald Trump have gotten out of a lot of relationships without getting taken to the cleaners, right? How? Prenups. So maybe the same principal can apply to cloud computing. 

When I mentioned this to Dr. James Baty [LinkedIn], vice president of Global Enterprise Architecture at Oracle, he cited a clause from the Uniform Premarital Agreement Act, as drafted by the National Conference of Commissioners on Uniform State Laws:

"Parties to a premarital agreement may contract with respect to the disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event.”

“I would certainly recommend that anyone entering into a cloud relationship consider what happens to their property,” says Dr. Baty. Of course, in a cloud computing relationship we’re not talking about who gets the CDs and your collection of Xena: Warrior Princess action figures. We're talking data. 

“It is important to agree on the fate of the data stewarded by the provider, “ says Anbu Krishnaswamy [LinkedIn], an Oracle Enterprise Architect.  “The parties need to agree on the process by which data will be handed back to the consumer, what technology will be used for the data transfer, the time frame for the transfer, the process for settling any outstanding balance, and the arbitration process to be followed if either party fails.”

Make sure you leave nothing on the table. “At what point will your billing detail, user profiles and records of network activity be returned to you by your cloud service provider?” asks Dr. Baty. “It's easy to get lost thinking about the obvious property and forget something that might be very important to you.” Those considerations go beyond what is covered in the service level agreement (SLA).

“Most people think of the SLA as the most important thing,” says Oracle Enterprise Architect Pat Shepherd [LinkedIn | Blog]. “But the rights of the client in terms of the provider’s liabilities and remedies are the critical piece. Things happen. Outages, security breaches. Things will break somewhere, sometime. You need to understand your rights in those situations.”

“SLAs don't help much,” agrees Dr. Frank Munz [LinkedIn | Blog | Twitter], author of Middleware and Cloud Computing. “If a cloud provider breaks their SLA, instead of a refund you might only get a discount on your next invoice. Obviously this doesn't compensate for the impact on your business. That's why you have to plan for failure.”

But failure can be a two-way street. For instance, if an application provided by the consumer and deployed on the provider’s platform fails to perform, the problem could be the application, or the platform, or both.

“So before throwing mud at each other it is important that the prenup states how to avoid these situations, or at least how to resolve those issues,“ says Oracle ACE Director Ronald van Luttikhuizen [LinkedIn | Twitter], managing partner at Vennster.

And if no resolution is possible? “The most important clause in a cloud computing prenup is the exit agreement between provider and consumer,” says Oracle ACE Director Floyd Teter [LinkedIn | Blog | Twitter], director of Innowave Technology’s program management office. “If the service provided is not up to expectations, or the customer opts to revert to an on-premise environment or even change providers to reduce costs, the most complicated and costly portion of the deal is often how the two parties go their separate ways.” A well-crafted prenup can help to avoid those costs.

Does this mean cloud computing is a bad idea? Certainly not. Cloud simply represents is a unique, technology-based business relationship. And relationships, business or otherwise, are best entered into with eyes wide open. 

“Know your way out before you go in,” says Teter. It may not save your “marriage,” but you’ll save time and money and you’ll eat a lot less aspirin. 

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