Read the fine print when using SaaS solutions

27 July 2022 ,  Luhann PrinslooOdirile Matladi 1455
Most of us have grown up having to purchase software licenses to install on our computers. Initially it came on floppy drive or CD-Rom and later you could download the license and install it. Such a once-off license usually allowed you to install and use the software on a specific computer, with newer releases or updates installed again, often at an additional license fee.

With the growth of high-speed data and the advancement of web-based technologies it has become a natural phenomenon for software to also migrate online, with this ‘traditional’ manner of software usage becoming more and more outdated and inefficient as users demand software and services that are always the latest, up to date, secure and accessible from anywhere with data access.

And so, online platforms and cloud computing have become the new standard, allowing customers to access their favourite technology apps, platforms and services through the internet. Although the use of software licensing has not disappeared, software providers have become wise to the need of users to always be up to date and have the latest and safest software available to them.

Enter the subscription license, whereby users are now able to subscribe to software as a service (SaaS) enabling them to gain access and use software applications online without the need to install the software on a computer or locally hosted server. For such ‘on-demand software’ customers usually don’t buy a product or license or require any local installation and can access and use everything via the internet often with multiple devices, enhancing mobility and remote working functionality. 

The relationship between customer and cloud provider is regulated by way of either a SaaS subscription agreement or service level agreement. Generally, these agreements set out: 

  • The functionality of the cloud services to be provided.
  • The terms of access to and use of the services, including prohibited use.
  • The rights, obligations and liabilities of the parties.
  • Terms and methods regulating payment.
  • Handling of data and personal information collection.
  • Ownership of intellectual property rights.
  • Software updates and support services.
  • Dispute resolution mechanisms.
  • Contract period and termination
As a customer, you may want to watch out for cloud providers who offer their cloud services on an ‘as is’ or ‘best efforts’ basis and potentially exclude or limit their liability for lack of performance. Here it may be advisable to consider the proposed service levels, minimum uptime commitments and the error or problem reporting channels of the provider before pulling the trigger. If uptime or performance commitments are not met, what are your remedies? Is there a reduction in fees or do you get service credits? All aspects good to know.

Additional aspects that should also receive your attention are where will your data be stored, to what data protections standards does the service provider hold its services, what cybersecurity prevention measures are in place, how regularly are updates or new releases issued etc. Particularly if your data is sensitive or if cross border movement of data is an issue, make sure you get the answers you need beforehand. 

SaaS options are abounding and provide incredible solutions for individuals and businesses alike. But not all software solutions are created equal, and the same holds true for SaaS solutions. So make sure you read the fine print and do your due diligence properly. If you need help with the fine print don’t hesitate to contact our legal information technology experts to help you review the fine print and if necessary negotiate a contract appropriate to your needs and risks.  


Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s). 
Related Expertise: Information Technology
Related Sectors: Technology
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