Understanding and Negotiating Software as a Service (SaaS) Agreements

Abstract

Software as a Service or SaaS is an important and growing segment of the commercial software market. Software as a Service can be viewed as a subcategory of the somewhat nebulous but increasingly important market generally denoted as cloud computing or cloud software. ‘The cloud software market reached $39.3 billion [US Dollars] in revenue in 2013’ growing at annual rate of 22.6% and is projected to ‘grow to $102.9 billion [US Dollars] by 2018’ for a ‘compound annual growth rate (CAGR) of 21.3%’ according to a recent forecast by IDC. Projected growth rates around the world are mixed but variances in terms of percentage changes, can be explained, to some degree, by the law of large numbers (i.e. a large entity or marketplace which is growing rapidly will be less likely to sustain such a growth rate whereas smaller ones are more likely to be able to do so for a greater period of time). All of which is to say, if you have not already negotiated and closed a SaaS or cloud deal, you are more than likely to do so very soon.