15 Redlines For Data Center & Telecom Contracts

Part of planning any long-term IT infrastructure purchase is establishing a baseline of operations for today and into the future. Too often organizations find an attractive service package without realizing the repercussions of that solution. Contract or vendor lock-in can be a serious impediment to growth. This is why establishing a thorough plan and knowing the full capabilities of a service provider are vital to the success of your solution. It’s also very important to work with providers that allow for flexible contract terms to help keep your organization agile. 

Here are 15 redlines for data center and telecom contracts to look out for:

  1. Protect yourself with maximum “rate hike” language at the end of term (especially with
    colo contracts). Remember, this is an industry where prices generally fall over time, so ensure that the economics of the industry are reflected in your contract terms.
  2. All data centers must be carrier-neutral with reasonable cross connect fees.
  3. All services should be co-terminus.
  4. The venue for arbitration and legal proceedings should be in your state (or a neutral state).
  5. Agreements should not auto-renew – they should go month-to-month after the initial term with minimal to no rate hike (see #1).
  6. Remove clauses that allow data center providers to move your equipment.
  7. A material breach should be limited to non-payment of undisputed fees.
  8. Confidentiality clauses must be mutual.
  9. Do not allow unknown documents to supersede your agreement or order form. As a fallback – include a provision stating that to the extent any document incorporated by reference conflicts with the signed agreement, the signed agreement prevails.
  10. Construct SLAs that provide a tiered structure, meaning that once a given SLA is triggered, there is another SLA tier beneath it that offers an even greater performance credit.
  11. Beware of SLA’s that fail to credit for outages that occur during service providers’ emergency maintenance windows. Any and all downtime should apply to your SLA remedies.
  12. Beware of SLA measurements and credits that don’t begin until after a client opens a
    trouble ticket. The clock begins when the issue arises, regardless of when the ticket is logged. 
  13. If you experience three outages, of any length, in any 1-year period you should be able to cancel the agreement and services without termination penalties.
  14. If a “long” outage exceeds a certain, pre-determined, length you should be able to cancel the agreement and services without termination penalties.
  15. All indemnification clauses should be mutual.

Follow these guidelines for contract negotiations, and work with a flexible provider to ensure your infrastructure services can scale into the future.

A key benefit to working with an IT services broker to source complex solutions is that they can help  negotiate with you. Read more about other benefits in this free e-book.

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