Should I sign a SaaS Agreement?

SaaS agreements are fast replacing ‘traditional’ software licences, and for good reason.  Also known as on-demand software, hosted software or web-based software, SaaS avoids traditional software installation, maintenance and management approaches in favour of delivering cloud-based applications via the internet.

Since a SaaS agreement are only a software subscription and not a licence, the continued use of the software requires a subscription, typically payable on a monthly or yearly basis.  Examples of SaaS apps are Microsoft Office 365, MailChimp, Google apps, Amazon web services, DocuSign, Concur, Slack and Dropbox.

While there are significant benefits to using SaaS, there are some things to consider before absentmindedly signing up to a SaaS providers standard t’s & c’s:

#1 – Amending the Terms & Conditions

Don’t just assume you need to accept the standard terms and conditions.  A number of SaaS provider will consider amending their standard t’s and c’s  in order to secure a desirable client. Read the t’s & c’s.  If there’s something you don’t like, try to get it changed. My mum always says ‘It can’t hurt to ask!’

#2 – Data Migration

Businesses usually have years of data. How easy and expensive will it be to upload your data into the SaaS software and is it compatible with your current software application to facilitate bulk uploads?  No business wants to manually produce reports from several sources.  Also, what happens if you want to part ways down the track – what’s the process and cost of extracting your data if you want to move software applications at a later date? We’ve seen clients charged the cost of a new Tesla just to get their data back. It’s not pretty.

#3 – Data Security

Data security is a key risk in any business. If you get it wrong, it can be detrimental to your reputation, and impact the trust your customer has placed in you.     When considering cloud service providers, check things like encryption and ethical-hacking certificates to ensure the SaaS provider is practising best practices and utilising appropriate technologies and processes regarding data security.  Also, check for data back-up and availability facilities of the SaaS provider.

#4 – Ownership of User Generated Content

Check whether the SaaS Agreement allows users to create user-generated content. If yes, who owns that user-generated content?  You may find that you’re about to agree that anything you enter and create in the SaaS software will be owned by the SaaS provider to use as they please.

#5 – Pricing

The last point that needs to be considered is the total cost of ownership. SaaS providers usually provide subscriptions on an operating expense model and capital expenditure model through annual or monthly subscription licenses.  Consider speaking to your SaaS provider about alternative pricing models for your business, such as a continual license for the software or a term license for 1, 2 or 3 years, or some other model that is more economical than the ‘off the shelf’ pricing structure.

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