SaaS SLA Agreement: Everything You Need to Know
A SaaS SLA agreement is an agreement at the service level for the customer of a software as a service product.3 min read
A SaaS SLA agreement is an agreement at the service level for the customer of a software as a service product.
What Are SaaS SLAs?
SaaS, or software as a service, is commonly used by businesses across all industries. An SLA, or service-level agreement, outlines the way the SaaS will be used at the level of the service provider. An SLA includes the expectations for both individuals or parties who sign the agreement. It becomes the roadmap for any upcoming changes in the cloud-based software service. These changes can be expected or unexpected.
An SLA for SaaS is drafted with the best interests of the software provider in mind and doesn't focus as heavily on the needs of the customer. Therefore, any business that plans to enter into a SaaS SLA should understand what might be included in such an agreement before starting the process of evaluating various software providers. An SLA refers to the availability of the SaaS, but many people use this term with a broad, far-reaching application. It can refer to more than just the technology of the platform.
SLAs may include:
- Data availability after terminating a contract
- Termination terms
- Security breach and notifications
When you're looking at an SLA, you might expect a broad, general document that covers more than what is actually included, often because people throw the term around without really knowing what it means.
Availability of SLAs
In an SLA, the availability is expressed in one of three ways:
- Three nines
- Four nines
- Five nines
As a service provider extends the availability to higher numbers of nines, which means the downtime will be lessened, the cost of the software goes up.
When considering a SaaS platform, make sure to look at both availability and how the system will function for your business. An SLA should be more focused on the business value and what the system brings to your organization, although it's not as easy to get SaaS providers to draft their agreements this way.
Downtime in an SLA
As you consider different factors, make sure to look at the downtime of the product as well. Many people refer to downtime in software, but this can include scheduled maintenance as well as unscheduled downtime. Talk to the service provider about what counts as downtime before you make a decision. You probably don't want to spend a lot on software that is frequently down.
An SLA will always outline compensation if the service is unavailable. An example of this might state that the service provider will issue a refund for the cost of the software, multiplied by the number of hours it was down. Downtime agreements won't cover any costs associated with potentially lost sales. Although businesses often want to have that stipulation written into the agreement, service providers will never agree to it. The liability is too high for the service provider.
Mean Time to Repair and Respond
A SaaS SLA should also include definitions for levels of severity, along with a mean time to repair and a mean time to respond for every level. For example, if the SLA defines a severity 1 issue as the most critical, which usually means that the system is down, the mean time to respond and repair should be shorter than the time to repair and respond on an issue rated at severity 3, which would most likely be an issue that causes inconvenience.
SLAs should also be based on your users. Some of your users will be more important than others, which means they'll need faster response times and more immediate support.
You might refer to these users as your VIPs, but no matter what you call them, they should always take precedence over any other user. For example, you might have a vice president that isn't able to respond to an email. If that vice president was ranked as one of your VIPs, this issue would be treated as a severity 1, no matter when it happens. Your SaaS vendor should have a list of names and/or titles to clearly understand who is classified as a VIP and requires immediate support.
If you need help with a Saas SLA agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.