Cloud Partner Agreement

What is a Cloud Partner Agreement?

Cloud Partner Agreements are entered into between Cloud Platform Vendors and Channel Partners who resell, market and promote the vendor’s cloud platform.

For example, Azure by Microsoft. Microsoft offers programs for their partners through their Cloud Solution Providers Program, with opportunities tailor-fit to their partners’ needs. The partners are given continued authorization to sell and promote Microsoft’s platform provided the terms in their Cloud Platform Agreement is complied with by both parties.

What are the key clauses in a Cloud Partner Agreement?

• Type of appointment – Cloud deployment modes are either exclusive or non-exclusive. Exclusive agreements may prevent either party from working with the competition. For example, the clause may provide that as long as the channel partner has a standing legal obligation to the cloud vendor, the former may not engage in another similar arrangement to sell a product of any of the vendor’s competitors.
• Specific territory of resale – Cloud partnership varies widely depending on which territory it is effective. The Cloud Partner Agreement must indicate whether the partner is only allowed to market and sell the vendor’s products within the specific territory. Also, the agreement may give the partner exclusivity in the territory, which means they are the only ones allowed to market in the stated area.
• White labelling – White label partners are allowed to sell the cloud services under a re-branded name. This means the name of the vendor may be removed and replaced with the brand name of the channel partner. A cloud partner agreement must provide if white labelling rights are given to the channel partner.
• Sales targets and other numerical goals – Depending on the needs of both parties, there may be sales targets. Some cloud partner agreements provide that sales targets will affect exclusivity. For example, failure to meet goals will remove from the partner the privilege to exclusively market and sell within a specific territory.
• Cloud demo access – The Cloud Partnership Agreement must indicate whether the partner will be given access to the cloud to demonstrate to potential end users. It must state whether it will be a limited or a full demo access.
• Acceptable use policy for the end-users – This clause must provide limits that the end-users should adhere to in the fair use of the vendor’s cloud and whether access shall be suspended if use is not within what is considered acceptable.
• Technical Support and Training– The Cloud Partnership Agreement must provide the level of support the vendor will give the partner and the end-users. If training and marketing materials will be given to the channel partner, it must be stated as well.
• Service Level Agreement – Defines the level of service that the vendor will provide. It is important that the channel partner knows the level of customer satisfaction that it can guarantee its end users.
• Ordering and Payment of fees – This clause provides for order process and the fees to be paid by the channel partner to the vendor upon sale of the product. For example, the channel partner shall submit a purchase order along with information relating to the end-user and the amount the end-user paid. The vendor will then provide the key to the end-user to be able to use the product. Within a specified number of days, the channel partner shall pay the vendor for the use of the product.
• Eligibility criteria of end-users – Depending on the type of product, criteria may be put in place to determine who are the end-users qualified to subscribe to the vendor’s service. It is important that this is indicated in the Cloud Partnership Agreement to avoid confusion and to ensure that the product is sold to users who are allowed access to the product.
• Confidentiality – Channel partners may have access to sensitive information regarding the vendor’s product. Non-disclosure and non-solicitation provisions are important in order to protect the vendor’s trade secrets.
• Subcontracts – Depending on the interests of the parties, subcontracts may or may not be allowed by the vendor.
• Term and Termination – This clause provides the duration that the channel partner can sell and market the products of the vendor. Further, all the other consequences relating to the termination shall be provided such as the continued fulfilment of orders placed prior to the termination of the agreement.
• Dispute Resolution – Should there be a disagreement between the parties, this clause will enumerate the remedies the parties can resort to for the settlement of the dispute.

What happens if I don’t put in place a Cloud Partner Agreement?

The absence of a Cloud Partnership Agreement exposes both the cloud platform vendors and channel partners to confusion and misinterpretation. Since there are end users to whom the cloud platform is sold to, it is risky if there is no clear written agreement regarding the pricing and limitation of use. A clear, well-written agreement must be made in order to protect the interests of all parties.