SaaS Tips by Sapna – Tip No. 1 – Rights vs. License

As a SaaS supplier, you do not provide a copy of the SaaS to your customer. Instead, you are providing your customer with a time-bound (for example, monthly or annual) right to access and use your software.

Today’s tip: Do not grant a license to your SaaS. Instead, provide your customer with the “right to use” or “right to access” the SaaS.

In the software transaction of old, you received a copy of the software to install on your computer which would required you to copy the software. You needed a “license” to be able to make these copies legally.

With SaaS, the delivery model is radically different. Instead of installing the software on your computer, you are most likely log on to to the supplier’s website to access and use the software. On the enterprise side as well, the supplier hosts and maintains the software which may be “integrated with” (not installed on) the company’s systems.

???? Since you don’t copy the SaaS you don’t need a “license” to SaaS. All you need is the right to access and use the software.

(This may be couched in license-type language such as “license to access and use”, though my preference, especially when representing the supplier is to avoid any terms that could imply that a license is being granted.)

Sometimes you will see licenses granted in a SaaS contract:
✔ If the SaaS application requires you to install a piece of software on your systems, such as an app on your phone
✔ if supplier is providing an API for integration
✔ to make copies of any documentation provided

To learn more and join the conversation, check out Sapna’s LinkedIn post.