Your customer may want to run a pilot of your SaaS application for a limited term. And your customer will likely expect to fully negotiate your SaaS agreement since it will be used in production. This may not be worth your time for a short-term contract. Consider having a separate pilot agreement for your SaaS, keeping in mind the limited reach of a pilot and your customer’s concerns.
Alternatively, you may want to have your customer commit to a full-term unless the pilot failed some clear, objective criteria. This would increase the chance that your SaaS term would be extended beyond the pilot.
A pilot, like a proof of concept, is a limited roll-out of the SaaS system with the aim of testing its capabilities. But there are important differences between a pilot and a POC.
- A pilot is a limited roll-out of the SaaS system in a live, production environment. This isn’t run in a sand-box or test environment. It is set up in the production environment and it connects to other live systems in your eco-sphere.
- Data used is not test data and is not masked. This is live, production data that can potentially include confidential information and personal information
- You will most likely have to pay the subscription fee for the period of the pilot.
The negotiation strategy for a pilot can be a little tricky. Since this is only a “test”, you may be pressured to not do a full dive into the agreement. But since this is a production application, you need to consider the warranties, security obligations, and risk allocation.
You may be tempted to negotiate a less-than-ideal agreement for the pilot given the limited production reach with the condition that the SaaS is not expanded into full production until a full agreement is negotiated. This can work, but you will need business buy-in. Nothing is more frustrating for the business than to have a successful pilot and then have to wait until a production roll-out until the full agreement is negotiated.
The learn more from the customer’s perspective and to join in the conversation, check out my LinkedIn post.
