While the story about Eli Lilly ceasing to be an Amazon Web Services customer turned out to be untrue, the episode does provide a salutary lesson for cloud vendors and potential users.

At the end of last week, technology site TechTarget broke the story that pharmaceutical giant, Eli Lilly, had walked away from Amazon's cloud as as negotiations had broken down. According to the story, the pharma firm had been trying to push for "some accountability for network outages, security breaches and other forms of risk inherent in the cloud." As Eli Lilly has been touted as a prime customer at a conference earlier in the week, it was an embarrassing situation for the cloud company.

However, the story wasn't true. As AWS CTO Werner Vogels tweeted to his followers "For those following this anonymous source story this morning: Eli Lilly is still very much a customer and has not dropped their use of AWS" and in a sarcastic aside to the use of TechTarget's anonymous "source" said "am pretty sure you can find a source for "Amazon CTO pregnant with Martian Baby."But it's clear that Vogels was being a bit economical with the truth, as civil service jargon has it.

In fact, the story was wrong but not all that wrong. Eli Lilly remains an Amazon customer but according to TechTarget, is not extending the contract: the stumbling block being this question of liability.

The negotiating points being raised were serious ones for any company looking to move on to the cloud. It's hard to believe that Eli Lilly hadn't raised them before and it's even harder to believe that Amazon had no ready answer to the queries - no cloud company would last very long by ignoring customer concerns. But, there you go, Amazon had clearly dug its heels in and lost the possibility of a major extension of a new contract.

The whole episode does stress how important it's going to be to address all concerns about a cloud contract upfront. It's going to be easy for the likes of Eli Lilly, which will have many corporate lawyers to call on, what's going to be harder is for the likes of small businesses tempted to use cloud services (as many are going to be) and forced to pay attention to the detail of technical contracts in a way that they may never have had to before. Every network outage, every security breach, every rogue employee, every software failure is going to have to be planned and accounted for. Cloud computing could possibly be a major IT advance for many companies - but it does need to be planned and implemented carefully. And, for once, this may be more of a legal problem than a technical one - much as it pains me to say it.

The other important question is what happens if Eli Lilly does find a new cloud provider. while keeping its relationship with Amazon. It will either have to support two cloud relationships - which will be an interesting challenge - or it will have to move from one hosting company to another - an even more interesting challenge. It's certainly a daunting challenge for the pharmaceutical company to get to grips with.

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