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26 February 2019

What is SaaS? Software as a service and how to approach it with the right attitude

With developments in technology, and especially cloud computing capabilities, more people are opting to use software as a service (“SaaS”) than ever before.

SaaS differs from traditional software programs.  Rather than installing a program on your computer or device, the software is accessed directly via the internet, usually by means of cloud software.  As a result, these arrangements often involve a subscription fee as opposed to a one off licensing fee.

While SaaS brings with it many benefits, it often involves complex arrangements and confusion as to who owns what intellectual property, and what each party’s obligations are.

These questions are normally resolved with a SaaS agreement. The SaaS agreement not only clarifies the responsibilities and rights of each party, but the written contract also helps to secure both parties’ interests into the future.

A well written SaaS agreement will usually cover the following items:

  1. the nature of the program/service;
  2. who owns the intellectual property, such as:
    • the software itself;
    • the data inputs; and
    • content generated by users;
  3. what happens if one party breaches the agreement;
  4. how the contract can be terminated;
  5. what happens to the data and software if the provider goes out of business;
  6. dispute resolution;
  7. the jurisdiction, or law that applies;
  8. what ongoing support and update services are available; and
  9. payment terms.

SaaS agreements are designed to  be comprehensive documents, and, like many contracts, they can end up being incredibly complex.  Given the broad range of topics an agreement needs to address, and the importance of those topics, it is crucial to ensure you have a properly drafted agreement.

As a consumer, you should ensure any agreement provided by a supplier suits your needs.  No matter how good the product is, if there is something fundamentally wrong with the contract, you will regret signing it.

As a provider, you should remember that SaaS agreements are not a one size fits all type agreement.  Consider what the software does, the business model used, and whether there are international laws that apply, particularly in relation to data and privacy.

A properly drafted agreement, prepared by a professional, can save both consumers and providers a great deal of stress in the long run.  If you would like to speak with someone about drafting or reviewing an agreement for you, please contact our experienced commercial law team on 07 4036 9700.

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