A successful software-as-a-service (SaaS) company may send out hundreds of agreements each month. Can standardization make agreeing and managing them easier?
This deep dive looks at one of the most common contracts for high-growth scaleups and their legal teams: the SaaS agreement. It explores what SaaS agreements are, who they affect, and how and why you should standardize them. Use the navigation below to find out more, or explore our deep dives on more specific contracts, like NDAs and MSAs.
What’s a SaaS agreement?
Software-as-a-service (SaaS) is the business model behind B2B tech titans like Salesforce, HubSpot and Zoom. These companies provide their platforms through a subscription model, which guarantees recurring revenue unlike on-premise solutions that are paid for once and installed.
A SaaS agreement is the commercial contract that sets out the formal relationship between the SaaS company and its customer. It might be a contract covering a pilot, a trial, or an auto-renewing annual subscription supported by an MSA (which could be viewed as a subset of SaaS agreements). What all contract types have in common is that they facilitate the provision of services to the customer in exchange for recurring revenue to the business.
Who do SaaS agreements affect?
SaaS agreements affect lots of different stakeholders across a company, including:
Legal counsel will own the template and guard against risk, controlling versions and making sure terms are favourable to the company.
Sales, sales managers and account executives are usually responsible for getting SaaS agreements signed, and will be looking to do this as quickly as possible.
Sales operations managers typically own the process through which SaaS agreements flow – particularly if the workflow is integrated with a CRM like Salesforce.
Approvers are the people who will need to approve the contract terms and will vary depending on the company’s stage and size. They could include customer success personnel, product teams (in relation to feature commitments, for example) or finance leadership (if there the agreement includes bespoke billing or invoicing arrangements that might affect forecasting).
Authorized signatories will vary from company to company.
Customers are an important stakeholder in the contract, as the end-user buying the software.
Why standardize SaaS agreements?
SaaS agreements are really complicated. They can cover everything from liability caps, to data use provisions, to indemnities, to marketing obligations, and much more. They can create obligations that renew every year and could last for decades. And if SaaS agreements vary much from one to the next, that complexity compounds – as does the risk that comes with it. If terms depart from the standard form, and then contract creators depart from those terms, legal will quickly lose sight of what’s being agreed and the risk to which the company is exposed.
Using a no-code template editor to standardize SaaS agreements means the contracts that salespeople send out will always use the latest terms approved by the legal team. It reduces the likelihood of an extended back and forth as negotiations proceed, and will ultimately lead to a better experience for both sides, as well as faster signing.
How to standardize SaaS agreements
Start with ‘why’
Remember the reason you need a SaaS agreement in the first place: to enable two parties to form a relationship where one sells services to the other. Getting to that point, in a way that both parties are happy with, should be in your mind at all times.
Research the perfect template
Look back through your past data to stress-test your terms and clauses. If a certain term is always negotiated and conceded, can you soften it now to make it more likely to progress quickly? (Remember your objective.)
Less is more
Brevity is a laudable aim for any contract – SaaS agreements included. Yes you need to cover all the necessary commercials, but a dense, jargon-filled legal document is going to take longer to progress and be off putting to your potential customer. Keep this in mind as you create your template.
If a certain term is always negotiated and conceded, can you soften it now to make it more likely to progress quickly?
Bring in the brand
If your SaaS company is an exciting, high-growth tech company with an attractive brand and cool illustrations, then bring those into your contracts. Give your SaaS agreements some personality; if they’re more pleasant to read, they’re more likely to be signed quickly.
If you have fallback positions for clauses that are commonly negotiated, find a contract collaboration platform with conditional logic. This will allow you to bake those deviations directly into the template, empowering salespeople to negotiate within the parameters set by legal.
Automate your SaaS agreements
If you manage SaaS agreements manually, across several systems (usually a combination of Word, email, DocuSign and shared drives), there’s an increased risk of error, difficulties with version control, and the likelihood that your standardization will fall apart. By automating your SaaS agreements with a no-code template editor, you remove this risk and help legal sleep easier at night.
Check out the ‘Modern contract handbook’, in which experts explore every stage of the contract lifecycle.
Useful features for standardizing SaaS agreements
If you’re looking to achieve standardization for SaaS agreements, the following features will help you to achieve a frictionless workflow:
Template-based self-serve. Empower teams to create contracts from templates that have been approved by legal.
Q&A flow. Users can populate contracts simply by answering natural language questions.
Approval workflow. Approvers in legal or finance can check that no changes have been made.
Conditional logic. Enable template owners to build fallback negotiation positions into the template itself, so that even deviations are standardized and legal-approved.
Mass actions. This time-saving feature allows authorized signatories to sign batches of similar contracts in groups, rather than having to do so one at a time – a great feature if your business is signing lots of SaaS agreements.
Tagging by value. Contracts above a certain value might be permitted to deviate from standard terms more frequently. A contract collaboration platform that lets you tag contract elements, like financial values, as metadata will mean you can sort your contracts by value in a custom dashboard, to see relevant contracts.
If you manage SaaS agreements manually, across several systems, there’s an increased risk of error and the likelihood that your standardization will fall apart
What if standardizing your SaaS agreements isn’t possible?
From time to time, you might not be able to avoid departing from your standard terms – and even from your fallback positions. A SaaS agreement with your biggest customer might be negotiated offline, in a room, perhaps even with external counsel. In that case, make sure you have an escape route – being able to export to Word is always useful if you absolutely have to.
If your contract workflow is supercharged with all these features, it will enable commercial and business teams to standardize SaaS agreements, leading to less risk, more certainty, and – hopefully – happiness on both sides of the contract.
Is standardizing SaaS agreements a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?
If so, standardize your contracts with Juro and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.