What Are SaaS Arrangements?

A SaaS (Software as a Service) agreement or arrangement is a contract between a SaaS provider and a customer that outlines the terms and conditions under which the customer can access and use the SaaS software. Unlike traditional software licensing, where the software is installed and hosted on the customer's premises, a SaaS agreement allows the customer to access the software remotely over the internet. This means that the software is hosted and maintained by the provider on their servers, and the customer simply uses it through a standard browser without the need to install or manage the software locally.

The SaaS agreement typically covers various aspects such as the scope of service, service levels, payment terms, data security, and customer support. It sets out the rights and responsibilities of both parties, ensuring that the customer can access the software securely and efficiently while the provider delivers the service according to agreed-upon standards. Payment for SaaS services is usually based on a subscription or pay-per-use model, providing flexibility for customers depending on their needs.

In a typical SaaS arrangement, the service software is shared by multiple customers, meaning that customisation is generally limited, with software configurations being largely uniform across all users. SaaS providers handle the software maintenance and support, often with specified service levels to ensure the application runs as expected. Service fees for SaaS are generally based on subscription rates or usage, accruing on a recurring basis.