“Software-as-a-Service,” commonly known as “SaaS,” is a subscription-based software distribution model in which the vendor allows users to connect to and use cloud-based applications over the Internet for the subscribed term. Common examples of SaaS services include Microsoft Outlook, Microsoft Office 365, and Zoom.
Businesses often use a SaaS CRM (Customer Relationship Management) tool to manage customer interactions, thereby eliminating the need to maintain the underlying software and hardware infrastructure. In this way, SaaS reduces IT costs and simplifies updates and maintenance, both of which are managed by the SaaS provider. Moreover, the SaaS model provides better IP protection to the vendor as the vendor does not have to provide the customer with access to the software’s source code. Published data suggests that over 80% of businesses use at least one SaaS application in their operations, while close to 90% use cloud services in one form or another.
SaaS services are provided pursuant to an agreement typically referred to as the “SaaS Agreement.” SaaS Agreements include many key provisions that can be favorable either to the vendor or the end-user customer, and such provisions should be considered and negotiated prior to signing on to the deal. We have highlighted some of the key legal issues and terms that the vendor and customer should consider when negotiating a SaaS Agreement:
While we have highlighted some of the key provisions and issues above, this list is not intended to be all-inclusive. Depending on the type of SaaS tool and unique business circumstances at issue, different key provisions (including provisions not identified here) may be more or less significant to the vendor or customer.
