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Is it common to use a combined Master template for Software Products/Support and IT Consulting Agreements for Fortune 500 / Global 2000 class of customers ?

A WA State startup in enterprise software and consulting space, has recently raised Series B financing; it has Global foot print with subsidiaries in Europe and Asia. It uses templates for legal documents such as NDAs, EULAs for software Products/solutions and Master Services Agreements for its consulting business, crated by US Attorneys. Other locations too have their own documents in use. All Its customers are Fortune 500 and or Global 2,000 companies. To avoid multiplicity of legal documents, it Sales Department proposes to use one master document for all global locations and for all products/services. It has provision of Check boxes to select the item/location for which the document will be applicable. The attorney’s fees to carve it out are estimated at $40K. Should CFO agree and include in the budget, especially in view of the fact all that its customers are going to insist on using their own set of documents rather than accept something from a startup? And is such a plan workable? And is it quite common in use by other companies?

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon
Is your start up selling the software via a license purchase model or via SaaS?
What I have seen for SaaS software deals is a composite legal agreement based on Services:
1. The annual subscription fee payable for using the software service
2. The one off fee payable for provisioning the service, configuring the software to be able to provide the service, migrating old data, training for users and other related services such as backups, upgrades and data security.

That's different than an agreement that charges for the right to use the software with options to pay for annual maintenance and support. These agreements tend to be in force for "on premise" systems where you license the software under one contract, and pay for installation, configuration, migration and training services under a separate Service agreement.

Big corporations will tend to enforce their versions of liability and damages as far as they can in either scenario.

What's your start up doing?

Regards
Len

Madan Aggarwal
Title: VP Operations
Company: Unify Square, Inc.
(VP Operations, Unify Square, Inc.) |

Going forward, we are offering only SaaS (for our software Products and Solutions) and also end to end Support Services for Microsoft Lync Deployments, both on subscription basis, generally on the lines you describe.
In the intermediate period we are offering ‘On Premise ‘ software as well but on Subscription basis to reduce upfront large payments and thus promote the adoption of the same. As a strategy we want to move all such customers as well to the cloud based SaaS offerings, though many of such customers are not yet sold on ‘cloud’ and we may lose them eventually.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Ok-two follow up comments:
1. Your "intermediate period" offering-make sure you and your sales team know clearly whether you are (a) renting them use of on premise software for a period, or (b) selling them a license that they pay for in instalments (and retain right of use). If (b) applies then a MSA would have to be supplemented by a License Agreement as I see it (anyone else care to comment on that?)

2. If you draft a single MSA for both SaaS and Consulting services, then make sure the combination of clauses in the agreement does not cause confusion or contradiction to the client or to your company. That is a function of how smart your contract attorney is. In general MSA contracts that are too broad tend to put people off, take longer to resolve questions and are just unfriendly.

When you draft your contracts, ask what would you say if you were the customer and you read the document.

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