What is Cloud based Software
Applications that live in the cloud, are also known as SaaS (Software as a Service), on demand, hosted or online applications. Such cloud based services are proving to be useful tools for businesses looking to save money and ease the burden on IT. An increasing number of organisations are entering into SaaS Agreements for their customer relationship, email, financial, recruitment and talent management.
Advantages of Cloud Based Software
In contrast to the traditional, installed software model, SaaS solutions can reduce the administrative burden on IT, personnel and the strain on physical resources caused by supporting and maintaining traditional software. Upfront capital expenditure can also be reduced, as SaaS software is rented on a monthly basis, rather than being purchased outright for a large upfront fee.
The appeal of cloud based software is clear. Businesses are no longer responsible for purchasing, configuring, loading, and maintaining applications onto their own hardware. In very simple terms all that is needed is an Internet connection.
However, due to the unique nature of SaaS applications it is important to obtain specialist legal advice on the terms of the SaaS agreement to ensure that it covers the requirements of your organisation. For example is disaster recovery included, what are the provisions for return of customer data, have you seen a copy of the SLA (service level agreement), are the data protection and security provisions adequate, will the source code be held in escrow by a third party?
If things go wrong, your data is lost and your customers start to move to your competitors – making a claim for breach of contract will not repair the damage already sustained to your finances and business reputation. These issues should be dealt with upfront, as part of the commercial negotiation process, with the assistance of an experienced specialist SaaS lawyer. Thereby your interests can be adequately covered to minimise the risks of the above scenario occurring.
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:
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