Have you ever signed a lease for an apartment for 3 years?? (I hope not)
And then 2 months into it realized that the walls were cracking, the electric bill was through the roof, and your next door neighbors like to party every night?
The feeling of being stuck in any contract is not fun.
First of all, click here if you're not exactly sure what SaaS means. (SaaS = Software as a service)
SaaS contracts are necessary to cover the cost of maintenance and support of software.
So, for example, it could be your Google Apps, Records Management System, GoToMeeting, DocuSign, or Microsoft 365.
But when it comes to a software contract, what should you expect?
Here's our opinion:
Be EXTREMELY cautious when considering a long-term contract.
When a company knows that they have you locked in for 3-5-7 years, do they really care how good of a job they're doing?
Your money is already in their hands. If you aren't using a trustworthy company... don't sign the 5-year contract.
Even if they tempt you with discounts.
Breaking the contract will cost more than signing a shorter contract every year.
Technology is changing EVERY DAY.
It is hard to be 100% sure that the company will be able to keep up.
Our computer programmers are learning about the newest advancements in technology every day.
Keeping up with
Internet Explorer updates...
the list goes on and on.
They must monitor all the updates and update the system so there are no issues.
So what can you do?
Derek Singleton on Sandhill.com wrote: "If you do agree to a longer term of three to five years, make sure you have an out clause. Typically this would provide a window of opportunity to break the contract during a specific time window. For example, it might allow you to walk after one month of using the system but before 90 days. Another example might be the ability to break the contract if certain levels of service are not provided consistently."
So, we do understand that some SaaS contracts may need to be more than a few years for the business to cover costs.
BUT be cautious, do your research, and always ask questions.
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