Heading into the cloud – contractual freedom through software as a service

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Software as a service is about freedom. We live in an on-demand culture where access is more important than ownership. Software as a service lets you enjoy the benefits of being able to access the software without the burdens if owning it. Let’s explore contractual freedom through software as a service and the benefits of heading into the cloud.

Benefits of heading into the cloud

There are several benefits to freedom when you ‘rent’ software as a service instead of buying a licence to software and installing it on your equipment or paying to have it developed for you:

  • fixed and predictable fees – you pay fixed and predictable subscription fees instead inflated licensing fees in the case of licensed software or variable and unpredictable development and support fees in the case of developed software;
  • accessible without maintenance – you have access to the software that you need when you need it and don’t have to maintain it when you don’t, which is advantageous depending on how long you plan to use the software for;
  • flexible, agile and adaptable – you are more flexible, agile and adaptable to changing circumstances insofar as you can cancel the software as a service depending on what the future holds (ideal where sudden changes could affect your business), whereas you’re typically locked in when licensing or owning software;
  • short-term commitment – subscribing to software as a service is the best option if you don’t intend on using one piece of software for a long time, because it requires no long-term commitment from you as a customer and you have more choice going forward;
  • superior software – you could use software that you could not afford to licence or own through software as a service; and
  • better tax – you may pay less or more predictable tax because you’re paying for the software over a period of time rather than laying out a capital investment.

Contractual freedom through software as a service

Software as a service not only results in contractual freedom for the parties, but also other kinds of freedom.

For vendors:

  • freedom from piracy – customers can’t pirate your software because it isn’t running on their equipment;
  • freedom to grow – you can provide the same or similar software to many customers simultaneously with minimal changes; and
  • intellectual freedom – you retain control of you intellectual property because it is not installed on your customers’ equipment.

For customers:

  • freedom from updates – you have access to an always up-to-date version of the software that you need;
  • free to work – you don’t have to spend as much time and money installing software on your own equipment; and
  • economic freedom – you typically pay less than you would for traditional software.

How to achieve contractual freedom through software as a service and head into the cloud

If you’re reading this, you’re probably thinking about switching from using traditional client-side software installed on your equipment to software as a service running over the Internet through the cloud and you’re worried about the legal aspects of making the change.

The legal aspects typically involve entering into some sort of agreement between the vendor and customer where the vendor agrees to provide customer with a right to use the software as a service on a subscription basis subject to certain conditions and in exchange for a particular fee. This agreement needs to cover both:

  • the commercial details of the arrangement, such as the price, support process and service levels; and
  • the legal details, such as intellectual property, limitation of liability and suspension of the service.

We can help you understand the legal aspects of contractual freedom through software as a service and head into the cloud by:

  • revising your existing legal terms;
  • providing you with new ones if necessary; or
  • checking that your software as a service solution complies with relevant electronic communications and transactions, data protection, cyber security and other laws.

You can read more about how we can help you with software as a service (SaaS) agreements here.

By |2019-08-06T17:50:25+02:00July 23rd, 2019|Categories: Contracts, Electronic Transactions Law|Tags: , |