Software as a service (SaaS) agreement

//Software as a service (SaaS) agreement

Are you interested in software as a service (SaaS), developing it for your customers, or using it in your business? Software as a service is a way of delivering software where a vendor hosts it centrally and provides it to the customer on a subscription basis.

It has become a hot topic in IT contracting circles with many organisations choosing to switch from traditional software models to software as a service because of the benefits it entails. We understand that you are keen to take advantage of these benefits, but there are many things you need to consider before entering into a software as a service agreement if you want to do so effectively. If you need to understand, draft, or negotiate a software as a service agreement – we can help.

Why is software as a service such a hot topic right now?

Software as a service is becoming a popular way of delivering software in the modern world because it has advantages to both vendors and customers.

For vendors:

  • no piracy – you don’t have to worry about your customers pirating your software because they are not provided with access to your code to the same extent as with traditional software;
  • economies of scale – you can provide the same or similar software to multiple customers at the same time with minimal changes; and
  • IP control – you retain control of your intellectual property because it is not installed on your customers’ equipment.

For customers:

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

How should I prepare to enter into a software as a service agreement?

Whether you’re the vendor or the customer, it’s important to be able to answer certain questions for yourself and agree on them with the other party before entering into a software as a service agreement:

  • trial periods – will there be a free trial period for the customer to test out the software?
  • configuration and implementation – who will be responsible for configuring the software and implementing it for a particular use case? The vendor, the customer, or someone else?
  • access and availability – how will users be able to access the software and when will it be unavailable? Will they access it through an Internet browser or an app? Will there be scheduled downtime on weekends and will the service have promised uptime?
  • maintenance and support – who will maintain the software and how will users be able to get support on how to use it? Will the vendor maintain the software or outsource that function? Will the customer support users themselves or will someone else do it?
  • personal information – who will be responsible for complying with data protection law when it comes to processing personal information using the software? The vendor, the customer, or the user? Does it shift depending on how the software is being used?
  • user behaviour – who will be responsible if users commit a crime, infringe someone’s rights, or otherwise cause trouble using the software?
  • fees and payments – what’s the fee structure going to be? Will it be volumetric pricing based on the number of users, modular pricing based on a basket of services, or something else?
  • suspension and termination – when can the vendor temporarily suspend access to the software or terminate it outright? What can the customer do when they have been suspended or the agreement terminates?
  • cross-border transfers – will the software be hosted outside of the country and will the customer be transferring their data containing personal information across international borders? Is this lawful in terms of data protection law? If it isn’t lawful, is it up to the customer or the vendor to make sure that it becomes lawful?

If you fail to ask these questions and agree on the answers with your vendor or customer beforehand, then you will likely end up in a dispute or with a software as a service agreement that doesn’t accurately reflect your expectations.

What can I do to ensure that I conclude a software as a service agreement as quickly and easily as possible?

We’ve been helping vendors and customers successfully conclude software as a service agreements for many years and can help you:

  • Understand software as a service agreements and other IT contracts by attending our workshop
  • Sign up customers quickly and easily by having us draft bespoke software as a service customer agreement templates for your solutions
  • Resolve negotiations when it comes to a software as a service agreement by having us review the documents
  • Get whatever help you need by enquiring now
By |2019-06-27T11:44:27+02:00May 10th, 2017|Categories: Contracts|