As more companies opt for cloud-based solutions to meet their business needs, the use of cloud services is on the rise.
Cloud service is a highly competitive industry, with many providers vying for market share. But this competition is precisely what creates an opportunity for businesses to negotiate better pricing – and service agreements. Learning how to negotiate with cloud-service providers ensures businesses get the best value for their money and helps them avoid overpaying for services they don’t require.
Moreover, proper negotiation with cloud service providers allows businesses to tailor their services to meet their unique needs. Cloud services are highly customizable, and providers are able to work with businesses to create bespoke solutions. Through negotiation, companies can better communicate their requirements and expectations for providers, which results in better service, improved efficiency, and, ultimately, increased profits.
And while negotiating with cloud service providers can be a hassle, the benefits far outweigh the effort it takes to get the best deal. Here’s everything you need to know about negotiating with cloud service providers to maximize your benefits and achieve your goals.Â
1. Know Your Needs
Before you start negotiating with cloud service providers, it’s important to have a solid understanding of what you need from a cloud service provider and a clear outline of your business objectives. You should also have a budget in mind and an expectation for the level of service you require.
When you know your needs, you can negotiate more confidently and be more direct in your requests, which will help you navigate different service offerings and prevent you from overspending on services that don’t bring value or that you simply don’t require.
2. Do Your Homework
In a highly competitive cloud services market, there are many options to choose from – and the choices can be overwhelming. Before you begin negotiations, research different providers to better understand their service offerings. Make a chart or pros and cons list to compare the various service providers and see how they stack up against each other to determine which one best fulfills your needs.
As you research your options, consider factors such as pricing, reliability, security, and scalability. Read customer reviews and ratings to see what other users have to say about the service providers. Be sure to acquire intel from contacts in your network familiar with cloud service providers to get a first-hand account of their experience.
3. Stipulate Data Ownership Terms
Another crucial aspect of negotiation is data ownership: It’s important to ensure that the terms of the contract clearly state that you own the data. Try to negotiate the right to retrieve your data in a usable format if you decide to terminate the agreement. If that’s not possible, most cloud vendors offer data export features, so you can still manually export and back up your data and then store it locally.
Ensure you can access your data during the contract period in the event of a breach of contract or if the vendor exercises their right to exit the contract. You should also have a plan for retrieving your data if the company files for bankruptcy or is suddenly bought or sold.
Finally, ensure the contract includes a transition period that allows you to move your data to a new cloud service provider if you choose not to renew the contract. The length of this transition period should be determined based on the complexity of the data migration involved but try to negotiate a minimum of six months.
4. Negotiate Service-Level Agreements (SLAs)
Service-level agreements (SLAs) clearly outline the level of service the cloud service provider is offering and provide clear solutions if the provider fails to meet the agreed-upon terms.
SLAs benefit both customers and providers because they offer a certain degree of transparency and clarity essential for both parties. A well-negotiated SLA should detail the terms of service and include key factors, such as performance metrics, service availability, data security, disaster recovery, and compliance and governance.Â
SLAs help improve communication between the customer and provider, establish accountability, and apply rules and requirements for providers if they fail to fulfill their terms of service. Ultimately, this encourages service providers to be more responsible and reduces risks for the customer in terms of service outages or other issues. The best negotiations are built on trust, and negotiating a solid SLA is a significant step in establishing long-term trust with a service provider.Â
5. Consider Long-Term Contracts
Speaking of long-term, consider the plus side of long-term contracts. Long-term contracts generally offer lower prices – and better service. A long-term contract should include the flexibility to make adjustments as needed – and as your business needs evolve or change.Â
It provides greater stability and improved predictability in terms of SLAs, pricing and access to resources, so you can budget more effectively and adapt your business plan accordingly. Plus, you can enjoy improved security and compliance with long-term contracts to ensure your data remains secure.
Final thoughts
To optimize your cloud computing experience and optimize your services, you need to be able to negotiate with providers. By researching and leveraging the competitive landscape, you can ensure you get the best value for your investment while maximizing the benefits of services tailored specifically to meet your business needs.
The five key tips for negotiating with cloud providers:
- Knowing your needs to access the services that are essential for your business.
- Researching and analyzing the market to find the best services and deals for your budget.
- Negotiating the terms of data ownership, so you can retrieve your data when you need it.
- Clearly stipulating the terms of a service-level agreement to outline the cloud service provider’s responsibilities and improves accountability.
- Opting for long-term contracts to lower overall costs and enjoy greater flexibility.
Learning to negotiate with cloud service providers optimizes the cloud computing experience, increases efficiency and improves profitability. By following the five tips outlined above, you can successfully negotiate better service, better pricing and better service agreements for your business.
What are some common mistakes to avoid when negotiating with cloud service providers? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!