SaaS Agreements: What They Are and How to Get the Most From Them?

Written By
Ravi K Nair
Technical Content Strategist
Last updated at September 05, 2022
SaaS Agreements: What They Are and How to Get the Most From Them?

Is your business seeking new SaaS applications? You can handle many elements of your organisation more effectively by installing SaaS software based on a carefully specified SaaS agreement.

 

A SaaS agreement is a contract between a customer and a provider that specifies the policies and terms under which the supplier or developer will grant the customer access in exchange for payment.

 

This article thoroughly explores everything you should learn about a SaaS agreement, including what the SaaS contract is, what terms and rules contain, etc. 

 

What is a SaaS Agreement?

 

The policies and terms of a software delivery methodology are outlined in a SaaS agreement. Software and data will be centrally hosted under this approach, and consumers will access the software and data online.

 

This agreement can include weighty service components, or it might just provide end users access to services that can alternatively be approved conventionally. No extra software or hardware is required in the SaaS model since data is uploaded and stored in the cloud.

 

Further, this accord comprises a privacy policy, usage provisions, customer restrictions, termination policy, geographical use guidelines etc. 

 

A SaaS agreement clarifies significant issues like patent rights, confidentiality, liability limitations, etc., that could directly or indirectly affect your firm. Your knowledge of these words boosts your ability to manage consumption effectively.

 

In addition, consumers should conform to the SaaS consensus and offer their permission before utilising the services. However, they need to read these guidelines while purchasing the subscription and report policy modifications if some future updates are caused.

 

Difference Between SaaS Agreement and Software License

 

In a typical software license contract, the organisation supplies the software to consumers through electronic software delivery via the web. This software is typically accessible for lifetime benefit until the subsequent version is launched when the user might prefer to upgrade. 

 

Nevertheless, the customer can continue to operate the outgoing software version, generally until the end of assistance. 

 

On the other hand, regarding SaaS agreements, subscribed consumers can utilise the software and other applications through the cloud with minimal or no need for physical cargoes and local installations. 

 

SaaS accord also proposes customers operate with online tools, benefits, and products hosted on the cloud. So, this model enables software usage depending on a cycle of subscription regenerations.

 

Software licenses can be premier and non-premier to a unique geographic place, while a SaaS agreement is generally not restricted to a particular region.

 

The traditional software license concurrence usually requires installing the software before utilising it. After the installation, the customers must configure the software depending on their conditions and convenience. 

 

In distinction, the SaaS license congruence permits users to directly operate the software via the cloud without installing or configuring it.

 

Why Does Your Business Need a SaaS Agreement?

 

A SaaS agreement aids as a standard foundation for software providers and patrons. It works as legal protection from the software providers’ viewpoint that attributes all duties to the end users. 

 

The SaaS dealer can even hold the clients accountable in case of service misusage or breach of agreement phrases per the applicable regulation.

 

Users need to comprehend the duties and terms of usage in a SaaS consensus. The buyers' agreement generally lists service-level assurances, licensing conditions, terms of service and access, how your information is saved or used, and specific restrictions.

 

It is vital to learn how the SaaS seller will utilise personal and business data for their marketing or analytics objectives.

 

Some of the compulsory characteristics you should check and understand in a SaaS agreement are the following:

 

  • How does the seller describe the data gathering and storing on their servers?
  • How does the provider accumulate the data?
  • The kind of information collected and the period for which data is held
  • Will the enterprise erase the data once you cease employing the services?

 

These are crucial questions for which you require answers. A SaaS contract lets subscribers know about data administration and SaaS usage spans. 

 

Reading the cloud assistance agreement necessities before accepting them is frightening but retaining certain elements boosts you to handle them better.

 

Significant Clauses Present in a SaaS Agreement

 

Access Rights and Customers 

 

Numerous SaaS contracts will have a metric to restrict access to a specific number of customers or a particular amount of data. Thus, your agreement should describe that metric, specify what a user is, and establish fines for misuse.

 

Customer Assistance and License

 

The provisions should demonstrate: 

 

  • How will you offer assistance for your services
  • Reply time
  • Any further assurances in terms of anticipated service

 

Data Privilege

 

This robust feature of a cloud service accord establishes who obtains the rights to information documented in a platform or service.

 

Data Protection

 

This division is specifically significant in consumer demands. The section should describe:

 

  • Encryption accountabilities
  • How usually data will be backed up
  • Protections presented
  • Safety of documented data
  • What ensues to data in the possibility of a security violation, bankruptcy, cessation of service usage
  • Where is data reserved?

 

License Range 

 

You should describe and restrict the rights that you transfer to subscribers.

 

Limitation of Disadvantage

 

You need to make any crevasses available transparent, and you can check the contractual penalties.

 

Master Contract Language

 

Numerous agreements might contain language that makes this document the master record of all services you offer, so you don't need to bargain or sign an entirely new contract every time a customer desires. 

 

Performance Purposes

 

Describe what end customers should anticipate from your service. It can include guarantees, appropriate outcomes, and what your service does not vow.

 

Pricing

 

When your organisation has the right to assign actual costs, you can establish pricing in the agreement. As SaaS contracts generally operate a subscription model, you will usually get paid monthly, quarterly or yearly. 

 

Privileges to a Physical Copy

 

Multiple SaaS agreements express that consumers do not have the privilege of a physical copy of the employed software.

 

SLA

 

A cloud service contract typically contains an SLA (Service Level Agreement). The SLA establishes the lowest performance standard for a SaaS. Performance norms are generally connected to service availability. 

 

In this portion of the agreement, you can specify your service's uptime percentage for services necessary to business processes.

 

Subscription Method and Model

 

Provisions should define precisely what the subscription scheme includes and how your services will be provided.

 

Duration, Termination, and Renewal

 

These three clauses confirm the accord’s conditions and the processes that should be observed to terminate or renew the assistance. 

 

Generally, a SaaS deal could have evergreen regeneration. It signifies the agreement will be renewed automatically for another duration unless a user actively ends their contract before a decided date.

 

Conclusion 

 

SaaS congruences are necessary parts of any software as a service organisation. Thus, ensure you work with professional lawyers who know how these agreements work when drafting yours.

If you need more information regarding this context, leave a comment. 

 

Also, if you are looking for a reliable and affordable organisation for the development of your potential SaaS product concept, get in touch with Noetic IT Services today.

 

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