Part of the BakerInform 2015 Cloud Survey Trends Series
1. Cloud deals are taking less time to complete
According to our survey, 92% of cloud services negotiations close in less than 6 months, with a majority closing in less than 2 months. These results represent an increase in speed to closure compared to our results last year. Better, faster, cheaper is not just the mantra, but is showing up where the rubber meets the road in cloud deals. Do not be misled, however. The foundation underlying this trend is likely more complex than it seems at first glance. The continued maturation of the cloud marketplace is happening on both the provider and customer sides. On the provider side, the service offerings are achieving greater uniformity that are better aligned with customer needs. On the customer side, the cloud is being factored into sourcing, procurement, and risk decisions, leading to better advanced planning for cloud integration. Also, the speed of getting deals done must be tempered against the regulatory and compliance hurdles with migrating data and applications to the cloud, which is an increasingly significant challenge for customers and providers, especially as parties strive to be more nimble. Have you and your enterprise thought about how the cloud factors into your sourcing strategy so as to avoid being part of the 8% of contracts that take more than 6 months to close?
2. Greater use of provider paper
Compared to last year’s survey responses, parties contracting for cloud services are more likely to use provider’s paper. If you are on the customer side, this may seem alarming at first, but do not be too alarmed (and providers, do not be too excited). Underlying this trend is the provider paper coalescing around a generally accepted market set of terms. Also, the provider paper may be accompanied by buyer addenda, for example buyer’s security standards, data processing terms, etc. The customers that are taking advantage of this trend are customers best prepared with checklists, pre-drafted addenda, processes and policies in place related to the cloud, and well identified key stakeholders, risk tolerances, and mitigation strategies.
3. Capturing value out of better, faster, cheaper
Do not let the better, faster, cheaper trend of cloud contracts pass overhead. The key to capturing value, whether from sourcing from the cloud or providing services via the cloud, is to do your homework. Our survey respondents highlighted the tools they used in cloud sourcing, which included internal standards, plans, and checklists. As noted above, the cloud is permeating enterprise thinking, which is enabling better, faster, cheaper. Consider issues such as: What data that could be moved to the cloud based on its risk profile (including compliance concerns)? What enterprise systems would most benefit from the scalability offered by the cloud? For which systems can the enterprise be more flexible regarding availability? Thinking through the risks and rewards of the cloud as part of your enterprise’s overall sourcing strategy is essential to capture the value from the cloud and keep up with the direction of the cloud marketplace.
Click here to view survey.