Podcast: Choosing & Negotiating with a Cloud Service Provider

In our latest installment of the HOSTING Cloud 360 Podcast Series, we caught up with Darrell Hyde, Chief Technology Officer for HOSTING. With the increased adoption of cloud computing solutions, we asked Darrell to share his best practices for choosing and negotiating with a cloud service provider (CSP). As usual, Darrell had lots of great advice to share! Following is a quick recap of our conversation. Be sure to listen to the entire podcast for Darrell’s expert insights.

What are some common mistakes that companies make when selecting a CSP?

Darrell points out that one of the biggest challenges that companies face when moving to the cloud is gaining the necessary input and buy-in from stakeholders. This feedback is critical for companies to gain a clear understanding of their desired “end state” should be – i.e., do they want to leverage the cloud for resource savings or to adhere to compliance regulations such as HIPAA and PCI?

A common mistake that companies make is focusing on the technology that a cloud solution provides. However, Darrell urges companies to consider the services a CSP offers before committing to them. Technology is one thing, but it’s important that the CSP’s work and service philosophies align with those of your company.

What information should companies have on hand when interviewing prospective CSPs?

Here, Darrell recommends that organizations ask the following questions prior to interviewing prospective CSPs:

  • What do I have on hand? Organizations should take an inventory of the IT assets they already have as well as the business processes that support them.
  • Why am I doing this? – Companies should know what their goals are for migrating to the cloud and their “desired state.”

What are some key areas that companies should focus on when evaluating CSPs?

Darrell shared a laundry list of questions that companies should pose to potential CSPs including:

  • Does the CSP have the necessary, relevant expertise to address their compliance burdens as they pertain to HIPAA, PCI, etc.?
  • What is the CSP’s competency around customer care? As Darrell relates, cloud customers have become more mature and desire a high level of service.
  • Can the CSP assist with capacity planning so that resources are not under- or over utilized? For example, will they monitor a client’s environment and alert then in the event a test/dev environment is running unnecessarily? Will they shut it down themselves or work with the client’s team to do so?
  • Does the CSP offer a unified support experience? Can you call your CSP and work with a single support team that is well-versed in your cloud environment and business needs?
  • Does the CSP provide simplified billing? Can they help with cost forecasting so that you don’t get hit with overage charges?

What are service level agreements (SLAs) and why are they important?

Darrell explains that an SLA is a contractual agreement between a client and their CSP around levels of care, responsiveness, performance and availability that the client should expect from their cloud environment. Some elements of an SLA are more technical in nature such as CPUs and latency. Other aspects of an SLA cover response time in the event of an outage, or how the CSP responds to a support ticket. Darrell emphasizes that companies should have a list of desired elements when negotiating the SLA, saying, “They are the currency that CSPs trade in.”

Darrell also points out that mature IT consumers are less concerned about the technology behind the cloud solutions and more focused on the level and consistency of service they receive from it. They also want to know what remedies are available to them in the event that the CSP defaults on their SLAs.

Darrell also states that financial penalties are never going to make up for lost business due to an application outage. According to Darrell, “While most SLAs include financial penalties, they shouldn’t be the mechanism companies use to enforce or guarantee availability.”

Finally, Darrell notes that if your application goes down and your customers can’t do business with you, then the SLA is worthless. While it’s extremely important to negotiate a strong SLA, you need to think about how you designed your infrastructure and applications, and if your CSP is able to build your applications in a fault-tolerant architecture.

Listen to Darrell’s podcast for more tips on choosing and negotiating with a cloud service provider. And visit the HOSTING Resource Page to access a wealth of blogs, white papers, webinars and case studies – all designed to help you achieve success in the cloud.


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