Providing customer with access to your software on a hosted or SaaS (Software as a Service) basis dispenses with the need for physical delivery of the software, and eliminates the risk of customers unlawfully copying or even distributing you software.  But even though there is no physical access to the software, the customer’s rights to use the software still needs to be licensed.

Issues to consider include:

  • How is the customer on-boarded/integrated?  Do you require remote access to the customer’s IT systems?  Are there any other customer dependencies?  What happens if you fail to meet the installation date?  If installation is delayed because of the customer, are you entitled to start charging for the services with effect from the agreed effective date?  And if it is your fault, is the customer entitled to a discount or other compensation, or even to cancel the contract?
  • Is there a minimum term during which the customer cannot terminate?  After the minimum term, does the term renew for a further fixed period or can it then be terminated at any time?  Can the customer terminate during the minimum term/renewal term, but subject to an early termination payment?
  • Will you be handling any of the customer’s data as part of the services?  Do you need to provide the customer with any comfort regarding the security of your IT systems?  What happens if you lose or corrupt the customer’s data? 
  • Does any of the data that you are handling constitute personal data (ie data from which a living individual can be identified)?  If so, are you registered with the Information Commissioner’s Office (ICO)?  Do you comply with relevant data protection laws?  Do you (or your hosting services provider) export the data to outside the EEA?  Is the customer responsible for obtaining any required consents from individuals?
  • Will you provide service levels for the availability of the services and/or the time within which you respond or resolve any faults?  What happens if you fail to meet these service levels?  (See also SLAs.)