Part of the b:INFORM 2015/2016 Cloud Survey Trend Series

1.         Buyers and Providers Identified Integration of Bundled Cloud Offerings as a Key Trend

According to our survey,  both Buyers and Providers identified the integration of bundled cloud offerings as a key trend going forward.  Increasingly, according to our survey, business solutions will be comprised of more than one cloud offering.  For example, a solution may include a platform as a service component provided by Vendor A and a software as a service component provided by Vendor B.  Understanding how those various component offerings work together and addressing the complexity of contracting with multiple providers for integrated solutions was identified as an increasing challenge.  We would expect that this challenge will provide opportunities for parties that are adept at managing the complexity of integrating such solutions.

In addition, we expect that parties will increasingly look to intermediaries for help in understanding how to address the complexity that such combinations raise.  Integrators will need to manage their relationships with various cloud component providers closely, so that such integrators can provide their customers with assurances across the entire offering.  Alternatively, we would expect that some customers will invest in developing the ability to manage such combination offerings themselves.  Understanding how and when to structure contracts to best allocate management and integration risks while effectively managing risk should become an increasingly important skill.

2.         Cloud Offerings Increasingly Part of Traditional Outsourcings

Cloud offerings are also increasingly becoming  an integral part of more traditional information technology and business process outsourcing transactions.  Contracts must be flexible enough to support both the leveraged structure of cloud offerings and the much more customized requirements of traditional outsourcings.  Accommodating both the highly specific requirements that are necessary to outsource mission critical services with the more general requirements of many cloud offerings requires the parties to both understand and balance the risks and rewards of these different components of a comprehensive solution. Contracts that are structured to reflect that balance will become increasingly important as these hybrid solutions are rolled out.

This trend will require contracts that are structured to accommodate both traditional outsourcing requirements and the less customized provisions associated with cloud services.  Recognizing where standardization is required and where it is not will continue to be a critical skill for practitioners in this area.   The insights provided by our cloud survey as to what terms and conditions of a cloud contract are negotiable and what terms are not facilitate this analysis.  In addition, providers that are able to fashion solutions that balance the benefits of standardization with the unique aspects of solutions that are customized for particular clients will be well positioned to take advantage of this trend.

3.         Robotic Process Automation

In addition to combining highly leveraged cloud based offerings with more bespoke outsourcing solutions, parties are increasingly also looking at integrating robotic process automation into delivery architectures.  This trend raises a host of contracting issues that buyers and providers must address, including service definitions, service level metrics, staffing obligations and pricing structures.  Robotic Process Automation also raises interesting questions around gain sharing incentives, particularly if the investment required to automate a process is significant.  Likewise, pricing structures and intellectual property rights allocation provisions must provide an appropriate foundation for innovation to take advantage of opportunities in this area.  Based on our survey results, we would expect parties to increase their focus in these areas over the next several quarters.

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Peter George practices international commercial law and regularly advises clients, both on the buyer and provider side, on domestic and multi-jurisdictional sourcing transactions, complex business process transactions involving human resources, finance and accounting and other web enabled services.