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Negotiating Cloud Computing Agreements

By Michael P. Bennett
February 24, 2010

Cloud computing has been characterized as a paradigm-shifting phenomenon that will change how we purchase IT resources. Though given different names, cloud computing has been around for some time, and the legal lessons learned from experience with traditional software licensing and outsourcing agreements can and should be applied to cloud agreements, but there are new issues which will need new solutions.

“Cloud computing” is a loose term that describes a variety of data storage, processing and application services, normally provided by a third party using equipment not located on the customer's site. These services include providing raw processing power on demand, special purpose applications on a subscription basis and remote data storage. An early form of cloud computing was “Application Service Provider” or “ASP” services, and another is currently known as “Software as a Service” or “SaaS.” Cloud services are normally provided using Internet technology, where the customer uses inexpensive hardware and an Internet browser to access the service and/or remotely stored data.

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