The Devil is in the Missing Details: The Cloud Partnership Agreement

Guest post by Greg Pierce, VP Concerto Cloud Services, Tribridge

Kati Hvidtfeldt has moved on to lead application program management for Microsoft Dynamics NAV. With the discontinuation of Kati Unplugged, we will continue to give partner perspectives on the benefits and challenges of offering cloud-based solutions to their customers.

This week Greg Pierce from Tribridge discusses the details partners should nail down before entering an agreement with a cloud services provider.

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Over the last few years, Microsoft Dynamics partners have wisely begun to shift their business models to offer cloud solutions. Mixed with the success stories, I’ve been hearing from partners who’ve had painful experiences with cloud services providers who are impacting their ability to deliver at the level that best serves their customers.

For some it’s confusion around support services. For others, it’s a disconnect between the cloud environment the partner described to the customer, and the environment the hosting provider is actually delivering. Many of the issues that are surfacing for these partners today could have been avoided if they had a better understanding of what they were getting into with the hosting provider.

It’s not all about dollars and cents. It’s about establishing a transparent partnership with the cloud services provider that best serves the needs of the customer and protects your business interests. On average, cloud agreement contracts are for 1-3 year terms, so it’s important that it is a relationship will derive benefit for all three sides – the cloud partner, Microsoft Dynamics partner, and the customer —from now and into the future.

To help ensure a strong and successful partnership, make sure your Cloud Partnership Agreement answers these questions.

1. Who owns the customer relationship? It’s important to agree on where the responsibility lies when issues come up. If it’s an applications issue, it’s pretty cut and dried: the Microsoft Dynamics partner would typically be responsible. But what if the customer calls and reports that everything is running slowly. How do you assess the problem? Who troubleshoots it? Just as important – do you have the contract with the customer, or does the cloud provider? When your company owns the relationship you get greater top line revenue impact, but you also take on more risk—so know what you’re getting in to. Most partners will want to maintain the customer relationship and be reported as partner of record. This varies among different cloud providers, so it’s another area to watch.

2. Who owns the data? Make sure the contract stipulates that the customer owns the data, no matter what. This may seem obvious, but think of a situation in which the cloud provider doesn’t acknowledge a problem but the customer is dissatisfied and stops payments. Without a contractual definition of data ownership, the services provide could shut off the customer’s access to the data. There are other avenues that can be explored to collect payments, but data access and ownership should never come into play.

3. How long are the terms of the contract? Contract terms should match your own internal goals from a partner perspective—and short is not always better. The partnership needs to support long-term customer relationships. And it’s better for all of your customers when your cloud services partnership leverages economies of scale: longer contracts should enable lower prices, especially for larger implementations. Shorter term contracts mean pricing can be re-negotiated, and the customer almost always pay more.

4. Will the cloud environment be shared with other customers or is it dedicated to the individual customer? The public/private cloud question should be probed beyond discussion at the bargaining table. It’s important to have someone with technical expertise take a look at the cloud architecture. Keep in mind that single-tenant vs multi-tenant isn’t a question of good or bad: it has to do with what you’re trying to accomplish and what the customer’s needs are. In more complex implementations the level of control can make a difference. For example, when a customer needs to reboot a SQL Server it can be a problem when 20, 50 or more other customers are affected.

5. What happens if the agreement is terminated? You need to fully understand the Service Level Agreement and know up front what it will cost to get the data back if the agreement terminates. At a minimum, the partner agreement should include an hourly rate or flat fee that the cloud provider will charge for data migration at contract termination. The exit clause should include causes for exit, no cause terms, and windows for notification.

6. Who will have hands-on involvement, and what are their processes? People and processes are just as important as the technology. Cloud providers can paint a pretty picture, but it’s important to get a tour of the data center and if possible their NOC (Network Operations Center). Find out what their processes are for escalation and change management, how often they test disaster recovery and what tools they’re using to track performance. Most important, make sure the way they approach customer satisfaction and support is in line with the way you do.

By doing diligence during the Cloud Partner Agreement stage, partners lay the foundation for a trusted relationship that benefits customers and drives new business.

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Tribridge is a technology services firm specializing in business applications and cloud solutions. Tribridge was named 2012 Worldwide Microsoft Dynamics Outstanding Partner of the Year.

To learn more about how to incorporate cloud-based solutions into your business plans visit the Microsoft Dynamics ERP Cloud page on PartnerSource. Go to www.microsoft.com/dynamics/growyourbusiness for resources that demonstrate to customers how Microsoft Dynamics ERP cloud, hybrid and on-premise solutions can benefit their businesses.