30 October 2018

Key issues for SaaS providers

This article is aimed at Software as a Service (SaaS) providers, and its purpose is to highlight a couple of key aspects that you should ensure are dealt with appropriately in your contractual terms, as well as addressed transparently in your dealings with your customers.

Increasingly we see businesses taking the responsibility for software procurement away from the core IT team. This means that you may need to deal with purchasers unfamiliar with key issues affecting software procurement.

As a vendor, this can make it tricky to set and manage your customers’ expectations. With this in mind, dealing with certain issues clearly in your contractual terms, and explaining these to your customer, can help to set the right tone for relationships going forwards.

Interaction with other software

In the wake of the SAP v Diageo case last year, you should be wary of any indirect access your product might allow to other back-end software programs used by the customer. It is unlikely to contribute to a smooth supplier-customer relationship, if your customer finds they are liable to pay additional user fees to one of their other suppliers, as a result of the way in which your service interacts with that supplier’s software.

Of course, this is really a matter of due diligence for the customer, but putting the contractual onus on them to check this might be wise, as well as raising the issue in your conversations with them – they may not otherwise know to check.

Transparency on service levels

Your customer may be unfamiliar with issues such as downtime for maintenance, and receiving support, so having an early conversation about service levels can reduce friction further down the line.

Two key points you should be clear on are points of measurement and the service measurement period. SaaS providers normally prefer service provision to be measured at their servers (rather than on the end-user’s computer). It is useful for the customer to understand this, and to understand that their inability to access your service may not always be your fault.

Your customer should also understand the service measurement period for your service levels. If you have a 99 per cent service level around the clock, does the customer understand that all accepted hours of downtime could occur inside its normal working hours, without the customer having any recourse? Although you may have avoided breaching your contract despite prolonged downtime in peak hours of use, you may end up with a frustrated customer.

These are just two of the many aspects of SaaS provision that need to be thought through. It is important to consider the most frequent issues that arise in your service delivery, and consider how you protect yourself contractually and manage your customer relationship. For more information or advice, please contact Ed Kilner at ekilner@hcrlaw.com.

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About the Author
Ed Kilner, Solicitor
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