Smarter Software Contracts

When engaging a software provider, the contract you establish will determine not only the delivery of technology but also the resilience of your business.

Too often, I see CIOs and CTOs chasing damages when a service is not delivered, rather than structuring agreements that genuinely protect their organisation.

Let’s explore how to shape contracts differently.

Two Contracts, Two Purposes

There are typically two agreements to consider:

• Project Services – a one-off contract for product or project delivery. This should include explicit go/no-go criteria, ensuring you receive quality software at a fair price.

• Software as a Service (SaaS) – an ongoing agreement that requires much more detail, as it underpins continuity.

What a SaaS Contract Must Cover

A robust SaaS contract should clearly address:

• Business continuity – how services will keep running under all conditions

• Data access and backup – where, how, and how often, ideally with independent processes

• Rights to software code – in case the provider ceases trading

• Cybersecurity responsibilities – including origination of incidents, allocation of costs, and expectations for resolution

• Incident management – agreed processes and clear return-to-service schedules for key modules

• Pricing certainty – with transparent renewal terms, ideally linked to CPI and supported by benchmarking against similar organisations

These elements shift the focus from recovering damages to ensuring the business remains operational, secure, and fairly charged.

The Intent Behind the Agreement

The real purpose of a SaaS contract is to secure a bespoke service at a reasonable cost while prioritising continuity and cybersecure operations. Seeking financial reimbursement when services fail may offer some comfort, but if business operations are paralysed, the damage will far outweigh any cheque.

Benchmarking and Balance

One of the strongest inclusions is an annual benchmarking process. This ensures costs remain aligned to market rates without placing unrealistic commercial pressure on the provider. The relationship should remain practical and balanced – supportive enough for the vendor to deliver effectively, yet firm enough to keep services fair and competitive.

Final Thought

Avoid the temptation of contracts framed around damages. Instead, design agreements that safeguard continuity, data, cybersecurity, and fair pricing.

This approach builds resilience, supports your provider, and most importantly, keeps your business running when it matters most.

If you want to learn more, feel free to email me here.