Negotiating with SaaS Vendors Doesn’t Require an SOS

SaaS is one of those acronyms used with such frequency that businesses rarely stop to remind themselves what it actually means.  It pays, therefore, to remind ourselves that SaaS stands for Software as a “service”. 
 
However, not all ASPs/ISVs are created equal and choosing the one that has the service most suitable to your needs can be a challenge.  Meeting it won’t be difficult if you ensure that any negotiations with the SaaS provider addresses the following: 
 
How solvent is the Application Service Provider? Request a copy of the company’s most recent financial report .  Is the company with whom you’re considering a long-term relationship liable to be around for the long-term?   
 
Are Audit Reports Automatic? The cost of a SAS70 audit is very high, which is the primary reason SaaS vendors are hesitant to conduct them.  When the subject of IT audits is being discussed, make it clear any relationship with your organization requires copies of these audits.  
 
Are the service level agreements published? An internal service level agreement (SLA) that a provider won’t publish in a contract does you no good.  Require that the vendor includes the performance standards you expect and the SLA that they claim to follow in the contract.   
 
Who’s on first? The people sent to sell and implement the service are part of the vendor’s “A-Team.”  You’ll be assured that your primary contact is just as skilled.  Don’t count on it. The agreement should provide that any account management assignment must meet with your approval, permitting you to interview the individual if necessary.   Again, it’s software as a service.   
 
Worst-case scenario. What then? Identify what the vendor’s disaster recovery (DR) protocol is.  And what its insurance coverage is if the DR fails.   
 
The ins and “outs”. Require an escape clause which provides for an established procedure for you to transition to another vendor if necessary and that your provider will cooperate in effectuating the move. 
 
Boilerplate contract language: It’s a contract, not a law. Nothing is non-negotiable. The attorneys may have written it and the person with whom you’re dealing may not have the authority to modify the terms of the boilerplate agreement, but someone does.  While you can draft an addendum which includes language that if the addendum conflicts with any provision of the agreement, the addendum is controlling, you are better off making refusal of the term(s) or condition(s) you demand a deal breaker.