Gartner Research

Unlimited Liability in Infrastructure and Cloud Sourcing Agreements and What Service Providers Need to Consider

Published: 25 May 2017

ID: G00331764

Analyst(s): Stephanie Stoudt-Hansen , David Ackerman

Summary

As IT infrastructure is outsourced, more organizations fear a loss from a security breach or environment instability and are asking providers for unlimited liability. Technology business unit leaders can use best practices to mitigate risk and speed negotiations with an effective middle ground.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Service Providers Must Assess the Value of Mitigating Organizational Liability With Effective Contractual and Structural Changes
    • Markets Continue to Shift to Cloud-First Strategies
  • Calculate How Offering Different Levels of Liability Can Provide a Market Differentiation and Valued Protection for the Organization and How Liability Can Be Mitigated
  • Establish Effective Processes, Roles and Rules Around Liability Definitions and the Impact of Each Risk, and Decide If the Risk Can Be Accepted and Mitigated

Case Study

  • Having a Contractual Liability Limit Plan Is Essential
  • Limits of Liability Are Important in Small Deals as Well
  • Lawsuit Shows Government Laws Can Limit Punitive Damages and Drive Lower Rewards

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