What flavour of SAAS would you like?
Unsurprisingly, we have been drafting and reviewing a spate of agreements for the provision of "software as a service" recently. Plenty has been written elsewhere about the increasing trend for software to be hosted by suppliers and delivered to customers "as a service" (see for example some of the predictions made through the SCL this year).
While reviewing the latest agreement designed to govern the provision of SAAS that has hit my desk, it occurred to me that I will again be discussing the distinction between a "hosted software" agreement (which essentially combines the features of a software licence with a hosting agreement) and a "software services" agreement (under which the supplier provides specified services using certain software). And the flavour of SAAS does make a big difference.
I am currently looking at an example of the former - so, for example, the specification/performance warranty is time-limited (to 90 days); if the customer uses the "service" after this time and it does not perform in accordance with the spec, there is no claim against the supplier (though there might be through the support services/helpdesk). This is quite different from a services agreement where the services happen to be delivered through software. In this case, a customer might reasonably expect the services to perform in accordance with the spec whenever they are requested.
Though this might seem like a niggly lawyers' point, it does mark a notable difference that may not always be picked up by customers. Quite reasonably, customers not familiar with software contracts and the basis for the time-limited warranty might assume that the services will continue to perform as promised whenever the services are accessed. In other words, some customers think they are buying "software services" when they are actually buying a right to access "hosted software". Also quite reasonably, software suppliers will argue that unless they are to make unpopuler charging increases, they should not have an additional exposure in relation to the use of their software simply because it happens to be hosted by them instead of installed on a customer's system.
Savvy customers will have to get used to taste-testing their SAAS before they buy.