Whether the software is used to run an online retail portion of your company, process payroll, or to collect and store customer data, SaaS is an important tool for new startups and established companies alike. When a company identifies a useful SaaS that they would like to use, the company must approach the software service provider and request to enter into a SaaS agreement, by which the company will gain access to the software for the duration of the agreement in exchange for a fee.
SaaS agreements can contain complicated language that is highly technical and confusing. The SaaS agreement is a legally binding contract, so it is important that the hiring company understands its obligations and responsibilities under the contract prior to entering into the agreement. If you are not confident in your ability to read and understand the terms and conditions of the SaaS agreement, you should consult with an experienced attorney who specializes in SaaS agreements to make sure that the contract is fair and reasonable.
Practical aspects of a SaaS agreement that businesses should fully understand
There are several key terms in a SaaS agreement that companies should look for and make sure that they understand in any SaaS agreement that the company plans on entering into. For instance, companies should understand:
- How the SaaS agreement can be terminated. Contracts can be terminated if there is a material breach of the contract by either party. For example, if the software service is constantly down and inaccessible, you would want to know if your company can get out of the contract. Why pay for poor service?
- Who is responsible for data privacy? Usually, the software service provider is responsible for data protection and privacy, but it is important to understand whether your company carries any liability in the event that there is a data breach.
- Uptime and downtime provisions. Most SaaS agreements include a guarantee on the uptime of the service provided to the business, usually a guarantee of 99% of the agreed upon use time. This means that the software will be available and usable by the company 99% of the time that the parties have agreed that the company will have access to the software (e.g., from 8 am - 9 pm, Monday - Friday).
- Service and maintenance details. Like with any software or computer system, there will need to be updates made to the system. Your company needs to know how maintenance outages will be conducted and how those outages will affect business.