Think service. Vendors may "try to squeeze SaaS terms and conditions into a software contract," says Azzarello Group consultant Nick Goss. A CIO needs to address how this relationship is different. Both established vendors and startups have latched onto SaaS as an easy route to market because it simplifies distribution of code, says Goss. But beware of those who may be "more focused on accruing customers than assuring reliable levels of service," he warns.
Get guarantees. Harrison Lewis, CIO at the grocery chain Haggen, negotiates application-specific protections. When Haggen signed with a SaaS human resources and payroll vendor, Lewis made the vendor guarantee to support the application for at least 10 years or pay a penalty. He also required software escrow, in case the vendor went out of business. "I'm looking to mitigate the risk, so what I put into the contract are the worst-case scenarios," Lewis says.
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