What should I look at first? 5 related statistics to SaaS contracts

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Are you willing to introduce a new SaaS? You're already familiar with the impact SaaS has on employee productivity. In order to fully enjoy the benefits of SaaS, proper contracts are essential. SaaS contracts contain key differences between service providers and users. Subscription terms, pricing structures, service level agreements (SLAs), data security regulations, and other relevant requirements are significant.

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As cloud-based data access and sharing, considering the right contracts is paramount in order to reduce legal even risks when using SaaS. By understanding the basic terms of a SaaS contract, you can skillfully explore contracts that you don't know where to start, and avoid future pitfalls associated with undeclared terms or false contracts.

In this article, we'll look at the basic terms of a SaaS contract and contracts what the contract team or purchasing team should decide when signing a contract based on actual statistics related to SaaS contracts.

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Key clauses to review in every SaaS contract

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License scope

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The SaaS agreement includes the following as a clause on the scope of the license:

• How are you allowed to access and use the service
• User restrictions or other defined rules considered to access

SaaS offers may offer SaaS offers, but they often provide services to multiple customers through a multi-tenant model of software service deployment. This allows multiple groups of customers to share a single instance of a single software and supporting infrastructure, but the data is separated so that software can be delivered at a much lower price than traditional software.

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Businesses often waste licenses while they pay a fixed usage fee because they are unable to properly manage SaaS usage. When signing a SaaS contract, it's a good idea to consider review the scope of the license and make sure there are flexible agreements that can reduce or increase the license as needed during the contract period.

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Liability of liability

Understanding the scope of responsibility in a SaaS contract is an important part of managing the relationship between service providers and users. To protect both parties from unforeseen liability, certain exclusions of liability, financial limits on liability, indemnity, and force majeure liability are included.

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Data ownership and security

Ownership of data in a SaaS contract is very important because using SaaS reduces a savings amount of data. If a software provider hosts customer data, ownership boundaries can be blurred, so it's essential to specify who owns the data.

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To ensure clarity about data ownership and security, it's important to review data storage practices and associated access practices. The SaaS agreement must also include a privacy policy covering how the service provider utilizes user data. This policy addresses the information disclosure, internal or third party sharing, data encryption measures, backup protocols, and the service provider's consideration in the event of a data or security breach.

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Customer service and support

The customer service and support coverage includes the expected quality of service and support coverage and response times. You can find out what support you can get from the vendor when using SaaS.

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Subscription plans, models, and pricing

It offers the features included by each subscription plan and how the SaaS provider provides the service. It provides explicit details about costs and costs how and when to claim them.

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SaaS contracts adopt a subscription model with monthly, quarterly, or early payment plans. In this model, customers pay to maintain access to services. Typical SaaS pricing models include:

• Flat-rate pricing: A single product with a fixed set of features is discounted at a specific price.
• Usage-based pricing: It operates on a pay-as-you-go structure based on actual usage.
• Tiered pricing: We offer multiple packages with different feature sets at different prices.
• Per-user pricing: There is a fixed monthly fee per user, and the overall cost ratio as more users are added.
• Per-active user pricing: You only charge for active users, benefits of the total number of registered users.

You can compare average rates used in the market and find out which pricing plan is appropriate for your organization's needs and usage patterns.

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Term, renewal, termination

In the case of SaaS, the contract period, renewal, and termination clauses are expected 1 year, and in the case of large companies, it may be extended up to 3 to 5 years. In general, SaaS contracts are often extended unless terminated before a specified date. To decline automatic renewals, you must notify us within the specified time period. The termination clause of the SaaS contract allows the contract to be terminated for any reason, and there is a notice period of 10 to 90 days.

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5 related statistics to SaaS contracts

Based on contract data from more than 1,000 companies, Common Paper, an American contract platform developer, 'Contract Benchmark Report'Has been published. Let's take a look at what to expect when signing a SaaS contract based on the SaaS contract statistics provided in this report.

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74% of contracts are signed by management

Many people, from considering to management, are considering in purchasing decisions, but considering only one person signs the contract. According to a survey by Common Paper, 74% of contract signers are employees, 18% are managers, and 8% are managers.

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Common Missions of Corporate Commitment in 2024 include sustainable management, digital transformation, innovation and growth, and building a resilient organization. In order for an organization to sign a SaaS contract more often and quickly, I agree how the SaaS can achieve the organization's goals and how it helps the company's mission.

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AI clauses that have been proposed to be in contracts

Over the past year, many AI products have been sold on the market. PwC Pulse Survey (PwC Pulse Survey)According to the survey, more than half of likely CIOs said they plan to invest in new technologies such as cloud or AI within the next 12 to 18 months, and 46% said they would invest in GenAI in particular.

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Barry Shirky, CIO of NTT Data, a digital business and IT consulting services company, also discussed, “Organizations can experience challenges if they fall behind in the AI race.”

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As the need to adopt AI tools to meet goals and requirements is growing, considering to the use of customer data in AI and ML models are becoming commonplace. In the first quarter of 2023, the contracts considered to AI were less than 5%, but compared to 25% in the fourth quarter of 2023.

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For SaaS using AI, the contract must clearly define definitions and actions for data protection and security, and ensure that AI algorithms are tested and specified.

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90% of contracts are likely to be

According to a Common Paper survey, 70% of SaaS contracts are annual contracts, and 19% are monthly contracts. Reward, it is said that 90% of SaaS contracts are costly, and 29% increase fees when renewing.

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When signing a SaaS contract, you should check how the subscription period for that SaaS works, whether the contract renewal is automatic, and how the notice period for the termination of the contract is set.

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The most common payment period is “30 days from the date the customer makes the invoice”

“30 days from the date the customer pays the invoice” is the most common payment period, accounting for 62% of signed contracts. 48% of contracts use monthly payments and 46% send annual payments. Quarterly estimates were rare, accounting for only 5% of all SaaS contracts.

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SaaS is a subscription business where periodic payments are arranged, so it is important to manage and track contract details. In order to prevent tragedies such as monthly payments that are different from actual use, it is important to check and manage actual users for each SaaS in real time.

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39% of SaaS contracts include an SLA

A service level agreement (SLA) meets the level of service expected from a supplier, and measures metrics to measure service and measures for failure to meet expected service levels.

Since an SLA allows communication based on terms between service providers and users, it is possible to further increase the clarity of the contract details.

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How to manage SaaS contracts

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Manage all your SaaS contracts in one place

As the number of SaaS used within organizations involved, managing Saas-specific contracts occurred, and the amount was calculated. Being able to archive and access Saas-specific contracts in one place without having to find them all makes the contract management process convenient and more efficient. Managing your entire SaaS contract in one place also makes it easier to make data-driven decisions.

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POPs provides a convenient console to view Saas-specific contract details at a glance. For each contract, can you manage the supplier, contract period, applicable SaaS usage status, pricing, and even the person responsible for the contract in one place.

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View the licenses being used by each SaaS user

Professional provider of digital employee experience management solutions NexThink (NexThink) researchAccording to the report, it is estimated that unused and wasted license costs within the enterprise will reach 45 million dollars per month. In the case of SaaS, employees or teams often buy and use licenses, which often results in duplicate purchases and double charges.

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POPs can check users for each license in real time using the API, and you can also view the licenses being used by each user. You can easily find and clean up SaaS that is redundant or hasn't been used for a period of time to reduce costs.

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Setting license end date notifications for each SaaS

Once a SaaS contract is signed, they often don't care about that contract. As can be seen from the statistics above, 90% of SaaS contracts are funded, so if the SaaS license used within the organization is not well managed, the estimated expenses can be paid every month.

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POPs can set license renewal and termination notifications. Can you set license end date notifications for each SaaS to prepare subscription renewals and estimated costs, or agreed terminating or discounted subscriptions.

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Want to learn more about How to manage SaaS contracts? If you sign up for a POPs demo, you can learn more about how POPs can manage contract tasks that were handled for each SaaS in one place. 👉 Request a POPs demo

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