Software Licensing, SaaS, and Service Levels

Software used to leave the building on a disc. The customer installed a copy and lived with it. That relationship is an end-user licence. The dominant model now is software as a service: a subscription to use a system that stays on the supplier’s servers. Slack-shaped products, accounting tools, a custom inventory platform — the customer does not receive the source code.

A SaaS agreement is a right of access. The clauses that earn their keep are uptime, security of the host, how many people may be signed in, and what happens to the customer’s data when the subscription ends. Delivery of equipment is the wrong mental model.

Service levels

If a bank runs on the platform, downtime is an operational event, not a mood. A service level agreement states the availability the supplier promises. “99.9%” is a number of hours, not a compliment. Across a year, three nines is on the order of eight hours and forty-five minutes of permitted unavailability. Count it before you agree it. Maintenance windows, and how they are excluded, change the arithmetic.

The usual remedy on the buyer’s side is a service credit: a reduction of a later invoice, not a cheque for lost profit. If you act for the buyer, read whether the credit is the sole remedy. If you act for the supplier, read whether the percentage matches an architecture that depends on a third party. An API outage and an application outage are different events. The SLA should not treat them as one sentence unless that is a considered choice.