This contract tip is about customizing your service levels and performance metrics for your SaaS vendor contracts.
So much of contract drafting is about making sure the terms match the parties' needs and the transaction's risks.
This principle is especially true when selecting service levels. We need to include service levels that reflect the customer's priorities, not just which service levels are the most common. Customers cannot always dictate service-level options. With larger platforms, you get what you get. But even then, we must understand our customer's needs to invest our negotiating currency into securing the best terms possible for the more important ones.
I have seen so many lawyers fight hard for uptime guarantees for SaaS agreements at the expense of other metrics that were strategically much more important for this particular platform.
Let's say a customer is looking at a platform that will be used infrequently and without any particular urgency. A six nines uptime (99.9999%) may not even be a concern for this customer. They may be OK with just three nines (99.9%). But what they may REALLY need is a speed of processing. It may kill the team's productivity if each transaction takes too long to process. In this case, a great uptime is meaningless for transaction processing speed is everything.
To figure out the right service level, think about the service and what could go wrong. Not just the big end-of-the-world-as-we-know-it disasters, but the mini-disasters and inconveniences that use the product are so much more challenging or more expensive.
Build service levels around what matters to this business for this service, not just common metrics that matter to others. Of course, to do that, you have to understand the customer's priorities and vision for this product. But we need to know that for every contract, don't we?
What other insights or advice would you add about service level selection?
