April 09, 2012, 8:00 AM — One of the most common mistakes that companies make when they enter into cloud and SaaS contracts is failing to negotiate exits from the contract as fully as they negotiate entries This is natural. Everyone entering into the contract is enthusiastic and wants to succeed. No one foresees a need to terminate the relationship, and there is the human tendency not to even want to address this.
Nevertheless, companies are ahead in the game if they take time to carefully define their exit strategies with their new vendors before they enter into any agreement.
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Here are some recommendations:
Read the vendor's termination clause. If you don't agree with it, amend it. Termination clauses for many cloud services contracts are usually 30 to 90 days advance written notice. Make sure that this termination clause is present in the vendor contract, and if it isn't, add your own.
Boilerplate contracts. If the vendor argues that its attorneys will not allow modifications to the "boilerplate" contract that it presents to you, do not feel that you can't add your own conditions and/or modifications. Keep the vendor's "boilerplate" contract intact, but add an addendum to the contract stating your terms and conditions for termination. You can integrate this addendum into the body of the contract by specifying in a cover letter to the agreement that it is the boilerplate contract, and the addendum to that contract that constitute your entire agreement with the vendor. You should also specify that if there are any differences in terms between the contract and the addendum, that the terms in the addendum will govern.
Vendor cooperation SLAs. Be sure that your written agreement with the vendor includes vendor cooperation SLAs if you find that you must terminate. Many vendors become uncooperative and angry when you leave them. If the decision is to deconvert from a vendor, and to go to someone else, vendors can be especially uncooperative. You can preempt these potentially difficult situations by including SLAs (and penalties) for vendor performance during a deconversion.