IBM Streamlines Cloud Contracts in Bid for Competitive Edge

On cloud contracts, IBM (IBM) apparently not only believes simpler is better but also that streamlining its legal agreements gives it a distinct competitive advantage over its cloud service rivals.

Seemingly turning to a whatever-it-takes mentality, IBM has pared down its previously lengthy cloud computing services contracts to a two-page document, replacing what the vendor described as a “complex contract that typically required long negotiations and reviews before a deal was signed.”

The vendor pointed out, without naming names, that by comparison, its competitors “require customers to review and commit to more complex that commonly are at least five times longer and also incorporate terms and conditions from other websites.”

Will a simpler, kinder customer contract benefit IBM’s cloud channel partners? One of IBM’s top legal eagle thinks it will have a noticeable impact on customers. If that’s true, maybe there’s something in it for channel partners as well.

“It’s ironic that cloud computing represents a faster and more innovative approach to doing business, yet lengthy and complex cloud business contracts from most vendors remain an obstacle,” said Neil Abrams, IBM vice president and Assistant General Counsel. “By dramatically simplifying and accelerating how clients contract for cloud services, IBM is making it easier and faster for companies to reap the benefits of cloud.”

IBM isn’t spelling out exactly how a streamlined contract accomplishes all of that but is mentioning how its pared down wording has won it the 2014 Innovation Award for Operational Improvement from the International Association for Contract and Commercial Management (IACCM).

The vendor said it set a small team about the task of reworking its cloud service contracts worldwide for all of its cloud offerings. The vendor said its clients received an immediate benefit from the simplified contract process, praising the “easy to navigate and understand” document and saving time by quickly closing a deal.

IBM, which is relying on cloud computing as one factor to arrest its 10-quarter streak of declining revenue, most recently posting a 4 percent sales tumble in its Q3 2014 along with a 17 percent downturn in GAAP net income. IBM chief Ginni Rometty’s three-point plan to resuscitate sales and earnings includes a dedicated cloud unit.

The vendor lays claim to some 30,000 cloud clients globally with a portfolio of some 100 cloud SaaS solutions and “thousands of cloud experts.”

IBM said that since 2007, it has invested more than $7 billion in 17 acquisitions to accelerate its cloud initiatives.