Gartner says that Australian organisations are forecast to spend $542.7 million on cloud application services or SaaS across the different software categories in 2013, up 27.7% from $424.9 million in 2012, with SaaS expected to have a compound annual growth rate of 25% in Australia from last year to 2017.
Gartner says SaaS contracts often have ambiguous terms regarding the maintenance of data confidentiality, data integrity and recovery after a data loss incident.
According to Alexa Bona, Vice President and distinguished analyst at Gartner, this leads to dissatisfaction among cloud services users and “makes it harder for service providers to manage risk and defend their risk position to auditors and regulators.”
The Gartner report says that through 2015, 80 percent of IT procurement professionals will remain dissatisfied with SaaS contract language and protections that relate to security.
Gartner says that, at a minimum, cloud services users need to ensure that SaaS contracts allow for an annual security audit and certification by a third party, with an option to terminate the agreement in the event of a security breach if the provider fails on any material measure.
In addition, it is reasonable for cloud service buyers to ask a provider to respond to the findings of assessment tools, Bona says.
“The Cloud Security Alliance (CSA), for example, has a Cloud Controls Matrix in the form of a spreadsheet containing control objectives deemed by participants in the CSA to be important for cloud computing.
“As more buyers demand it, and as the standards mature, it will become increasingly common practice to perform assessments in a variety of ways, including reviewing responses to a questionnaire, reviewing third-party audit statements, conducting on-site audits and/or monitoring the cloud services provider.”
Bona also cautions that cloud users should not assume that SaaS contracts include adequate service levels for security and recovery.
“Whatever term is used to describe the specifics of the service-level agreement (SLA), IT procurement professionals expecting their data to be protected from attack, or to be restorable in case of an incident, must ensure their providers are contractually obligated to meet those expectations.
“We recommend they also include recovery time and recovery point objectives and data integrity measures in the SLAs, with meaningful penalties if these are missed.”
According to Bona, as no consensus exists about how commitments to security services should be described contractually, most SaaS vendors choose to commit to as little as possible. She warns, however, that it is crucial that some form of service, such as protection from unauthorised access by third parties, annual certification to a security standard, and regular vulnerability testing, is committed to in writing.
Gartner says that the lack of meaningful financial compensation for losses of security, service or data also represents an “undesirable form of risk exposure” in SaaS contracts.
“SaaS is a one-to-many situation in which a single service provider failure could impact thousands of customers simultaneously, so it represents a significant form of portfolio risk for the provider.
“Therefore, the majority of cloud providers avoid contractual obligation for any form of compensation, other than providing service in kind or penalties in the event that they miss a service level in the contract. SaaS users should negotiate for 24 to 36 months of fee liability limits, rather than 12 months, and additional liability insurances, where possible.
“Concerns about the risk ramifications of cloud computing are increasingly motivating security, continuity, recovery, privacy and compliance managers to participate in the buying process led by IT procurement professionals. They should continue regularly to review their cloud contract protection to ensure that IT procurement professionals make sustainable deals that contain sufficient risk mitigation,” Bona concludes.
Co-author of the Gartner report on security in cloud services, Jay Heiser, will be speaking on the topic of ‘Practicing Safe SaaS’ at the Gartner Security & Risk Management Summit in Sydney from 19 to 20 August.