How to Save Clients Money on Colo Contracts

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Sean Patrick TarioBy Sean Patrick Tario

Ask any data center service provider and they will tell you the majority of traditional telecommunications brokers who feed them business add little to no value for their clients during the data center selection process. The common response from such brokers is, “But I know data centers and colocation — I sold colocation back in the days of Exodus." That’s a common response I hear from such brokers. However, this is the equivalent of saying, “I know how to code — I developed websites in HTML back in the day," or “I know how to sell enterprise network services — I crushed it selling T1 circuits door-to-door for years."

Today, there are exponentially more providers in the industry, offering exponentially more services than there were even five years ago. Equinix, Telx and Coresite — though viable national contenders — are only a few of the 100-plus global, national, regional and local data center providers in the market today.

In addition, the information clients can access is unlike it has ever been before. Websites, such as datacentermaps.com and quotecolo.com, enable them to spam local service providers with power and space requirements with a few clicks of a mouse. These tools can do the same job brokers do — only faster and likely covering two to 10 times more options in any local market.

The days of hammering the phones to win business brokering services are long gone. Those channel partners who actually can demonstrate mastery of the solutions a client is looking for are finding themselves in the driver’s seat in larger, complex opportunities. Clients are willing to pay a premium for finding the ideal solution, not simply a solution, to their IT problems.

To survive, you will need to either learn the new language and dialects that have matured around you or tie yourself at the hip to someone who already has.

With this in mind, I will share three key sections in nearly every data center colocation agreement that will save your clients money and time, and prevent needless pain down the road.

  1. The Auto Renew Clause
  2. Termination Clauses for Cause
  3. Pre-negotiated Price Increases

The Auto Renew Clause

Though there are a handful of progressive data center providers that already have removed language related to automatic renewals, most providers still have this language in their contracts. Endless dollars have been spent and time wasted by clients who have sourced a new data center only to find out 30 days prior to the termination of their existing contract that their contract auto renewed 30, 60 or even 90 days prior. This forces the client to stay where they’re at or pay significant “termination fees" before they can walk away free and clear. Tell your clients to strike any/all language pertaining to an auto renew clause. Force the provider to talk directly with your client and negotiate a renewal contract. 

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