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What Is A SaaS Agreement?


In many cases, your business may use business that your business doesn’t own. This is usually done through licensing. But today, much of the software that we use is in the cloud, or online, which, although similar, is not exactly the same as licensing software.

Whether you are a company using software, or a software developer seeking customers to use your software, it can help you to understand the difference between these two different software models.

The SaaS Business and Software Model

With a  traditional software license, the business using the software, will have the software installed on their computers or servers. But in what is known as Software as a Service, or SaaS, you are using software that is located elsewhere—usually online or in the cloud.

The differences between licensing and SaaS agreements can be subtle, and there are many similarities to them.

Who Can Use the Software and How Much Help Will You Get?

The SaaS agreement will address things like who allowable users are, where the computers accessing the software may be located, how many licenses will be given, and how many people can use the software at any one given time.

Because the software is not local, in or on the business’ computers, a SaaS company may need to do more for customers when it comes to technical support. The SaaS agreements can detail what kind of support will be provided and how it is accessed.

Because SaaS is an online service, a lot is subject to outages. What guarantees is the SaaS company making as to outages, whether caused by the SaaS company or not? When will the business be entitled to some recourse, if the software is unavailable for an extended period of time?

Protecting Data

Once again, because the software being used is located somewhere different than where the business or its computers may be, the SaaS agreement has to address who owns what data. Businesses should be aware of this provision and take measures to protect their data—especially if there is a dispute with the software company. You don’t want sensitive customer data, or information that you need to run your business, being “held hostage” by a software company where there is a dispute.

Speaking of client or customer data, a SaaS agreement will also detail security; how secure or encrypted will data be that is held by or in the software company’s software or servers? What guarantees is the company making, to keep this information protected?

Liability and Disclosure

Just like a traditional licensing agreement, a SaaS agreement will state the extent of the license that is given, as well as limitations of liability—a SaaS company usually will want to absolve itself or liability if the business gets sued.

The government is very wary about subscription models, and many companies have gotten in trouble for making it difficult to cancel subscriptions, or misrepresent what the subscription will cost, or how often the company will be billed to use the software.

Call the West Palm Beach business litigation attorneys at Pike & Lustig today for help with your business related agreements.




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