SLAs Archives

SaaS Agreement – FAQs -What is a SLA and Essential Terms to include in a SLA

SLA is the abbreviation for a service level agreement.

Is a SLA a Software Licence

No. A service level agreement (SLA) sets out the SaaS services being provided in addition to the right to use the SaaS software.

What is a SLA

A SLA forms part of a SaaS agreement. The SLA can be contained in a separate schedule to the SaaS agreement, or included in the main terms and conditions of the SaaS agreement. SLAs set out:

How much Detail

It is advisable for a SaaS supplier to provide some degree of detail in the SLA to avoid spending unnecessary time negotiating the addition of further details requested by SaaS customers.

The degree of detail included in the SLA will depend upon:

  • How much a SaaS customer pays for the SaaS software and services;
  • Whether the SaaS software is business critical i.e. online banking;
  • What is standard in that particular business sector.

Terms to Include

SLAs should generally contain the following provisions, where appropriate:

  • Guaranteed availability of the services and software;
  • Timing of and prior notice of maintenance;
  • Description of the security provisions at the hosting centre and the technical infrastructure;
  • Problem response and resolution times;
  • Customer support description and support hours;
  • Provision of service availability reports;
  • Backup of customer data;
  • Security and disaster recovery provisions;
  • Right to terminate for breaches of the SLA.
  • Service credits for breaches of the SLA;

Advantages of having a SLA

If SaaS suppliers do not have their own SLA, customers will often try to impose their own SLA on the supplier which does not “fit” the SaaS services being provided. This can lead to protracted negotiations about the content of the SLA.

Summary

Due to the unique nature of SaaS and in particular the use of SLAs you should seek specialist legal advice on the content of a SLA whether you are a SaaS supplier or a SaaS customer to ensure that your rights are adequately protected.

Help

Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience dealing with SaaS, cloud computing matters and IT law issues. If you require assistance with any SaaS agreements, cloud computing matters or any other IT legal issues please contact me at:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – FAQs – What is SaaS and Essential Terms to include in a SaaS Agreement

SaaS is the abbreviation for “software as a service”. You may know this under another name, for example subscription agreement, software on demand, software subscription agreement, cloud computing or ASP services (application service provider). These names all refer to the same thing – software being made available via the Internet to users.

What is a SaaS Agreement

A SaaS agreement is simply the name used for the agreement between a SaaS supplier and a SaaS customer which sets out the terms under which SaaS software may be accessed. This will usually include a service level agreement (SLA).

Differences between a SaaS Agreement and a Standard Software Licence

A SaaS agreement differs from a standard software licence in that:

  • The SaaS customer will not usually receive a physical or installed copy of the software;
  • No ownership in the SaaS software will be transferred to the SaaS customer;
  • The SaaS customer ‘s right to use SaaS software will end upon termination of the SaaS agreement.

Essential Terms to Include in a SaaS Agreement

The following legal issues should be included in any SaaS agreement, whether you are a SaaS supplier or a SaaS customer.

Software Licence

Access to the SaaS software should be limited to the term of the SaaS agreement. Once the SaaS agreement expires or terminates the software licence should automatically terminate.

If the SaaS customer is a global entity, you should specify:

  • Which companies or entities may access the SaaS software;
  • In which territories the software may be used; and
  • The number of authorised users;
  • Identify the specific purposes for which the SaaS software may be accessed; and
  • Name any third parties who will be permitted access to the SaaS software i.e. outsourcing providers or clients of the SaaS customer.

Intellectual Property Rights – IPR

The SaaS supplier should retain ownership of all IPR in the SaaS software and services it provides. The SaaS customer should retain ownership of all IPR in its systems, content and data. You should specifically state that the source code remains owned by the SaaS supplier. The SaaS customer should grant the SaaS supplier the right to use its IPRs for the term of the SaaS agreement i.e. to display the SaaS customer’s logos and copyrighted information.

Applicable Law, Jurisdiction & Language

State which law applies to the SaaS agreement and any disputes arising from it. In international SaaS agreements make sure that you specify in which language the dispute will be dealt with, and if the SaaS agreement is in more than one language, which language prevails if there is a discrepancy between the two versions.

Return of Data

At the end of the SaaS agreement the SaaS customer’s data should be returned. The format in which the data is to be returned and payment for this service should be agreed in advance. Additionally the parties can agree that the SaaS supplier will provide assistance in transferring SaaS customer data to a new supplier – in return for payment for this service.

Data Protection

The SaaS supplier is the data processor and the SaaS customer is the data controller. Under data protection law different rules apply to the data controller and the data processor. The SaaS supplier is obliged to process data in accordance with the SaaS customer’s instructions and should protect itself against claims from third parties that such processing was illegal. Likewise, the SaaS customer will also need to protect itself against claims from third parties caused by the SaaS supplier not processing data in accordance with its instructions or the terms of the SaaS agreement.

From May 2018 each party’s data protections obligations must be set out in a written data processing agreement which should form a schedule to the SaaS agreement.

Service Level Agreement (SLA)

This sets out the hosting, support and maintenance services being provided to the SaaS customer by the SaaS supplier. The SLA should specify where the data centre is located, who is operating it, what security, backup and disaster recovery procedures are in place. Support hours and support services for dealing with hosting problems and software problems should be identified and documented and the procedure for dealing with upgrades and maintenance to the software should be specified. The particular details will depend on the amount being paid for the hosting, support and maintenance and the purpose for which the SaaS software is being used.

Summary

Due to the unique nature of SaaS agreements you will need to seek specialist legal advice on the content of a SaaS agreement whether you are a SaaS supplier or a SaaS customer to ensure that your rights are adequately protected and that you are fully complying with all applicable laws.

Help

Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience dealing with SaaS, cloud computing matters and IT law issues. If you require assistance with any SaaS agreements, cloud computing matters or any other IT legal issues please contact me at:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – FAQs – Disaster Recovery

Should SaaS suppliers include disaster recovery provisions in a SaaS agreement? If so, what provisions should be included in the SaaS agreement and where.

Disaster Recovery

Disaster recovery sets out the processes and procedures to be followed by a SaaS supplier in the event of its SaaS software and subsequently a SaaS customer’s  data not being accessible. The disaster usually results from a problem with the technology infrastructure on which the SaaS software is being made available, i.e. the SaaS supplier’s data centre or telecommunications provider.

Disasters

The most common disasters are:

  • power failure at the data centre;
  • physical damage at the data centre i.e. flood or fire;
  • physical damage to SaaS customer data i.e. loss, corruption or deletion;
  • insolvency of the data centre or third party telecommunications provider;
  • theft of hardware on which the SaaS software operates.

In any of these circumstances, the disaster usually makes the server on which the SaaS software is running unavailable to the SaaS customer.  As a result, the SaaS customer will not have full access to the software, SaaS services and its data. Where a SaaS customer is operating a live website, the website will cease to function correctly, or possibly at all.

Disaster Recovery Provisions

The following disaster recovery provisions should be set out in the SLA which forms part of the SaaS agreement:

  • the right of a SaaS customer to be informed of the disaster;
  • the obligation of the SaaS supplier to keep the SaaS customer informed of steps being taken to rectify the disaster;
  • the estimated time for restoring servers and SaaS customer data;
  • the right for the SaaS customer to terminate or be given a copy of SaaS customer data in the event of a disaster;
  • details of the SaaS supplier’s testing procedures i.e. how often its disaster recovery processes are tested.

Costs

The extent and speed of the disaster recovery offered by a SaaS supplier will depend upon the level of fees charged for the SaaS services. SaaS suppliers often include the costs of basic disaster recovery within their licence fees. In addition, or as an alternative, they may offer higher levels of disaster recovery for payment of additional fees. The faster and more individual the disaster recovery process is, the higher the fees will be.

Alternatives

If a SaaS supplier does not provide any disaster recovery services, or a SaaS customer is not satisfied with the disaster recovery offered, it should consider setting up its own disaster recovery procedure with a third party, particularly if a disaster would be business critical i.e. for a SaaS customer providing online banking services.

Some companies such as the NCC and Iron Mountain offer third party disaster recovery services to SaaS customers directly, whereby they  take over hosting of the SaaS services to ensure continuity of services for the SaaS customer.

Help

Irene Bodle is an IT lawyer specialising in SaaS, with over 14 years experience in dealing with SaaS, cloud computing and IT law issues. If you require assistance with any SaaS agreements, cloud computing concerns or any other IT legal issues please contact me at:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – FAQs – What is a SLA?

SLA is the common abbreviation used for a service level agreement. When providing SaaS services to customers you need to include a SLA in your SaaS agreement, either as part of the main terms of your SaaS agreement or in a specific SLA schedule. A SLA should set out the following support and maintenance services that you will provide to customers to ensure that the SaaS software is made properly available to them.

Availability

The level of availability of the SaaS software should be stated in percentage terms. The basis on which availability is calculated should be included i.e. monthly, annually and any exclusions from the calculation should be clearly stated.

Software Support and Maintenance

Customer support is usually provided to assist customers when problems arise with the availability or functioning of the SaaS software. Customer support provisions should include:

  • A description of the support services to be provided;
  • The times and days on which support will be provided;
  • How support will be provided i.e. online, via telephone;
  • Response and resolution times for dealing with SaaS software problems; and
  • Maintenance times for carrying out updates, repair and maintenance to your SaaS software.

Hardware Maintenance

SaaS providers use servers (hardware) usually located in a third party data centre to host their SaaS software. The provisions to be included in a SLA will be determined by the level of service that the third party data centre provides to the SaaS supplier. The data centre provisions should be reflected in the terms of your SLA but will generally include:

  • A brief description of the security provisions in place at the data centre;
  • A brief description of the technical infrastructure at the data centre;
  • Any applicable disaster recovery provisions;
  • Backups of data.

Commercial Considerations

The way in which you incorporate a SLA into your SaaS agreement and the degree of detail that you provide to SaaS customers will largely depend upon the following:

  • The type of SaaS products and services you are supplying;
  • How much the customer pays for the SaaS product and services;
  • Whether the SaaS product is business critical i.e. online banking;
  • What is standard in that particular business area; and
  • The terms of the hosting agreement with your data centre.

Summary

Due to the unique nature of a SLA you will need to seek specialist legal advice on the content of a SLA whether you are a supplier or a customer to ensure that your rights are adequately protected.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – SLA – Proposed EU Model Terms

The European Commission has recently released a paper on cloud computing stating that it will develop model terms for SaaS agreements which should be available for use in service level agreements (SLAs) by the end of 2013.

Need for Model Terms

An SLA determines the relationship between a cloud provider (SaaS supplier) and a cloud user (SaaS customer). During the negotiation process the terms of the SLA often form, or destroy, the basis of trust that SaaS customers have in a SaaS supplier’s ability to deliver the SaaS services. SaaS customers often complain that SLAs:

  • are too complex;
  • contain extensive disclaimers;
  • impose a choice of applicable law; and
  • exclude liability for data integrity, confidentiality and service continuity.

The Commission claims that SaaS agreements will be made fairer and safer by using model clauses. It argues that SaaS customers are currently “locked in” to agreements with SaaS suppliers making it difficult for customers to change their supplier due to non-interoperability and data portability issues.

Common European Sales Law and Model Terms

Within the context of the Commission’s on-going work on developing a common European sales law, it is now also preparing model terms specifically designed for cloud computing. These will cover issues such as:

  • subcontracting;
  • data preservation after termination of the SaaS agreement;
  • data disclosure and integrity;
  • data location and transfer;
  • direct and indirect liability; and
  • ownership of the data.

The proposed new model terms are being designed for use by SaaS suppliers in SaaS agreements with consumers and small businesses.

Voluntary Certification and Audit

In addition to developing model terms, the Commission wants to develop new EU-wide voluntary certification schemes and independent compliance mechanisms to promote trust in cloud computing. Such schemes would include independent certification:

  • of a SaaS supplier’s IT systems’ compliance with legal and audit requirements;
  • that a SaaS supplier’s applications and systems are interoperable and secure; and
  • that data is reversible and portable.

Changes to Current Model Clauses

As part of the above process, the Commission will also review the existing model contract clauses. These can be used in SaaS agreements where personal data is transferred from the EU to non-EU countries to ensure compliance with EU data protection laws. The Commission intends to adapt these model contract clauses to “fit” with cloud services.

Summary

Currently the Commission is working with stakeholders to prepare the new model terms and to develop systems for the voluntary certification and audit of SaaS suppliers. In late 2013 when the drafts are available, SaaS suppliers should review their SaaS agreements and SLAs to check their compliance with/divergence from the proposals.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – SLA – Terms to Include

The following issues should always be included in any SLA, regardless of the type of SaaS product and services being supplied.

Times

Clearly define times for all of your actions. Business hours and days need to be carefully defined, particularly if you have customers outside of the UK, or your maintenance and support staff are located across the globe.

Language

If your SaaS agreement includes non-English speaking customers specify in which languages you provide support.

Availability

Customers expect to be given a guarantee of the availability of the SaaS product and services. This usually ranges from 95 – 99.9%, depending on the type of services being provided. It will also largely depend upon the availability guaranteed by any third party data centre you use to host your SaaS products and services.

When stating the level of availability of the SaaS products and services specify how and when availability will be measured, remembering to exclude any down-times for maintenance from the calculation.

Customer Support

Provide a short description of the support that you will provide to customers. This should include details about how you can be contacted and the way in which you will respond to, and fix software problems. Specify severity levels and state times for responding to and fixing software problems, remembering to differentiate between problems (errors that can be reproduced) and bugs.

Maintenance

Set out the times and days when you will carry out maintenance. Distinguish between regular maintenance and emergency maintenance, as you may need to install emergency patches and carry out emergency repairs at any time. State whether or not any prior notice will be given. Any downtime caused by you carrying out scheduled or emergency maintenance should be excluded from the calculation of availability.

Specify whether or not upgrades are included in the services. Will they be free of charge, or are they only provided upon payment of an additional fee? Are upgrades mandatory or voluntary? Also identify what is actually included in an “upgrade”.

Security

Briefly describe the security provisions that you have in place at your data centre and internally within your organisation. These should include:

  • Details of data centre security structure and infrastructure;
  • Details of the firewalls and cryptology you use;
  • Any obligation to notify the customer of security breaches;
  • Restrictions on access to passwords;
  • Information about virus protection mechanisms.

Other Issues

Other provisions that you could consider including in your SLA are:

Commercial Considerations

The above is a general guide to the terms to include in a SLA for a SaaS agreement. The degree of detail that you provide will largely depend upon the following:

  • The type of SaaS products and services you are supplying;
  • How much the customer pays for the SaaS product and services;
  • Whether the SaaS product is business critical i.e. online banking;
  • What is standard in that particular business area.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – FAQs – Hosting

When negotiating a SaaS agreement you may come across the term hosting. What is hosting and is a hosting agreement necessary?

SaaS and Hosting

Under the terms of your SaaS agreement you will be storing, processing and publishing customer content and data on the Internet using servers located and operated at the data centre of a third party. The third party operating the servers is known as a hosting provider. The hosting services are provided from a data centre owned and operated by the hosting provider.

Usually the hosting provider owns and maintains the servers in the data centre, however increasingly it is becoming more common for SaaS suppliers to rent “space” in a data centre and then store and maintain their own servers there.

The type, scope and specific nature of the hosting services to be supplied by the hosting provider will be set out in a hosting agreement.

Hosting Agreement

The hosting agreement specifies:

  • the scope, type and nature of the hosting services being provided to the SaaS supplier; and
  • the terms on which the SaaS software, content and customer data will be stored on behalf of the SaaS supplier.

The agreement is entered into between the SaaS supplier and the hosting provider.

As the customer has no agreement with the hosting provider it is essential that the relevant terms of the hosting agreement are reflected in the service level agreement (SLA) between the SaaS supplier and the customer, as hosting problems could have a critical impact on the customer’s business.

Negotiating a Hosting Agreement

Hosting providers are usually large telecoms or Internet service providers (ISPs). They use standard terms and conditions which are usually non-negotiable and very favourable to them. However, depending upon your bargaining power it may be possible to individually negotiate some terms of the hosting agreement for example, service credits, availability, liability and exclusions.

Dedicated or Shared Services

Depending on the price paid for the hosting services and the industry sector in which your customers operate, you may need “dedicated” rather than “shared” hosting services. Dedicated hosting services involve the storage of each individual customer’s website and content on a single server. If you decide to use a shared hosting option the content and websites of multiple customers will be stored on the same server.

Most SaaS suppliers use shared servers, where this is acceptable to customers, as hosting on dedicated servers is more expensive.

Location of the Data Centre

The physical location of the data centre used by your hosting provider is very important to SaaS customers. Due to ever increasing and evolving security and data protection laws, rules and guidelines, it is essential that you consider:

  • the needs and requirements of your customers;
  • your long term business expansion plans;
  • relevant data protection laws; and
  • the physical location of your customers;

when selecting your hosting provider.

If you decide to use a hosting provider with servers located outside of the UK for a UK government customer, even if the hosting provider itself is located within the UK you will encounter serious issues. Conversely, if you decide to use a hosting provider with servers located in the UK for a German customer, you will also encounter problems.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – SLA – Data Backup

When providing SaaS services you must specify in your SaaS agreement who is responsible for the backup/loss of customer data. The extent of your backup duties should be included in the service level agreement (SLA) and these will be dependent on a number of factors set out below.

Backup Process

You should set out details about the nature of the backups and the data media being used, for example:

  • will the backup be made to tape or disk or using some other media
  • how often will the backup media be changed/rotated/updated
  • how often will backups be made i.e. hourly/daily/monthly
  • will incremental backups be made

Security

In view of customer concerns over data security it is essential that you provide details of where and how the backup media will be stored, for example:

  • will this be at a physically separate location
  • will a provider other than the hosting centre be used
  • what security is in place at the storage location
  • who has access to the facility
  • is emergency power available

Disaster Recovery

This should be considered as an add on extra, to cover the eventuality that the hosting centre (where the SaaS software and data backups are created)  becomes unusable.  The disaster recovery centre should be physically remote from your hosting centre to avoid a double hit! Other points to consider are:

  • carefully define what a “disaster” is
  • set out expected data recovery times
  • test your disaster recovery procedure at least once a year

Commercial Considerations

The exact nature and extent of any data backup (and related disaster recovery) services that you offer to SaaS customers will depend on:

  • how much has the customer pays for the SaaS solution, maintenance and support
  • whether or not service credits are offered for breaches of error fix times
  • whether the SaaS application is business critical i.e. online banking
  • what is standard in that particular business area

Exclusions

Ensure that errors or problems caused by something beyond your control are excluded from your obligations i.e. loss of data caused by the customer’s failure to use the specified browser, hardware, virus checking programmes etc.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – SLA – Security Issues

As a SaaS supplier you will have noticed the increasing concerns about security voiced by SaaS customers. Your SaaS agreement should therefore provide comfort to your customer by including security provisions in the service level agreement (SLA). The specific matters you should consider including are set out below.

 Access

The persons able to access the hosting centre should be very limited and the individuals should be defined. Access should only be allowed for hardware and software maintenance. A record of all visits should be logged, which can be easily achieved if swipe cards are used. Remember that when using a third party hosting centre, access will be controlled by, and should reflect, the terms of your hosting agreement with the hosting centre.

Physical Security

This should prevent unauthorised access to the hosting centre to prevent damage, loss or theft to hardware and software. Surveillance of the hosting centre is essential and details of whether or not this is 24 x 7, via video camera, watchmen or electronic alarm systems should be included in the SLA. Within the hosting centre itself, racks themselves should be separately secured.

Hosting Environment Security

In order to provide a continuous service to customers, the hosting centre must have:

  • an uninterrupted power supply;
  • a dual power source;
  • air conditioning; and
  • fire and flood detection systems.

Server Security

In order to protect your servers, you should use:

  • up to date virus protection;
  • up to date security patches; and
  • firewalls.

Data Security

In order to protect customer data you should set out:

  • how, where and when data will be backed up;
  • how often data will be backed up;
  • where backups will be stored; and
  • when discs/tapes will be rotated.

ISO 27001 Certification

ISO 27001 is an internationally recognised security certification which is often required by SaaS customers who are looking for assurance that adequate levels of data security are in place to protect their data. Having this certification demonstrates to customers your commitment to data security by confirming that you comply with “best practice” security management.

Disaster Recovery

Is this offered at all, consider whether is it included in your standard subscription fee, or if a premium will be charged. Also, remember that your disaster recovery centre should be physically remote from your hosting centre, and with a different provider.

Commercial Considerations

The level of security obligations offered to SaaS customers will depend upon:

  • how much a customer pays for the SaaS solution, maintenance and support;
  • whether the SaaS application is business critical i.e. online banking;
  • what is standard in that particular business area.

Exclusions

Ensure that your SaaS agreement contains appropriate security obligations applicable to your customer, for example using up to date virus programmes. Exclude liability for any security breaches which are caused by something beyond your control or an act, omission or breach of your customer’s security obligations under the SaaS agreement.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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SaaS Agreements – SLA – Error Fix Times

There are no standard fix times for remedying software errors, problems and bugs in a SaaS agreement.  Fix times need to be tailored to the services being provided and should be set out in the service level agreement (SLA). The following factors need to be considered when SaaS suppliers establish fix times in their SaaS agreement.

Duty to Acknowledge, Respond and Fix Errors

Time to acknowledge, respond or fix a SaaS software problem should start to run upon receipt of a customer message, from acknowledgement of the error, or some other trigger event.

Nature and Severity of the Problem

How severe is the problem or error? i.e. critical, medium or low

Is the problem an error (a software problem that can be reproduced) or is it a bug?

Type of SaaS Solution

Is the SaaS application business critical? i.e. online banking

What is standard in that particular business area?  i.e. online recruitment, accounting, banking

Commercial Considerations

How much has the customer paid for the SaaS solution, maintenance and support?

Are service credits offered for breaches of the fix times?

Practical Issues

Is there a global support hotline?

Are IT staff available to work 24 x 7?

Does the SaaS provider have access to the third party data centre?

What are the terms of the hosting agreement with the third party data centre?

Exclusions

Ensure that errors or problems caused by something beyond your control are excluded from fix times i.e. the customer’s inability to connect to the Internet.

Exclude errors or problems in the SaaS agreement which are caused by the customer i.e. the customer’s failure to use the specified browser, hardware etc.

Help

Irene Bodle is an IT lawyer specialising in SaaS agreements with over 10 years experience in the IT sector. If you require assistance with any SaaS, ASP, software on demand contracts or any other IT legal issues contact me:

irene.bodle@bodlelaw.com
www.bodlelaw.com

To register for my newsletter click here

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