We’re all guilty of it: while installing a piece of software and a Terms of Agreement pops up, full of fine print legalese, as quickly as possible, we find the “I Agree” button and get on with the installation. It’s one thing to do that with a game, some inexpensive piece of software where (you hope) very little is at stake. It’s a different matter with business-critical software as a service, for which you’ll be paying hundreds or even thousands of dollars each month. In that case, reading the contract is re-e-e-ally important!
Even if you do read all of the fine print, it’s often hard to decipher contracts that are full of legal jargon. Believe or not, the best thing to do is to call your lawyer to go through it and alert you to any problems or risks. If you decide to go that route or not (signing up with a company), you should at least be aware of some of the traps and pitfalls of such contracts.
1) Early Termination Fees.
Think twice before agreeing to a term limit. Software for running your home care business is necessarily complex and full of features and it takes time to truly understand and evaluate the quality and functionality. You just can’t do it justice during the “sales phase” when the bells and whistles are flashing at you.
You should be able to cancel with reasonable notice, if you find that the system doesn’t really work for you, without paying an unreasonable buyout amount. If they force you to pay out the entire contract, that’s not an early termination penalty: it’s a full purchase!
2) Hidden Fees
Hidden fees can take the form of features that are not included in the agreed-upon price, additional training and support fees, third-party software requirements, etc. Support is a common one for people to be hurt by. People often assume that, if they are paying big bucks for the software, they’ll get as much help as they and their staff need, at any point during the relationship, but it’s often not the case.
Raising prices can fall under this category. Companies get you to sign up at amazing bargain basement prices then then has almost doubled your price within a year or two. It is pretty hard to budget or plan for growth when these price hikes come willy nilly. You watch your margins shrink year after year.
3) Evergreen Clause
Another common trap is what’s called an “evergreen clause”. You probably won’t see the words “evergreen clause”, but it basically means that, if you don’t cancel well in advance of the term ending, you will automatically be “agreeing” to an additional extended term, with the same restrictions as the first. Some require you to cancel 90 days before the end of your contract. If you are waiting for the term to end, you could be in for a rude surprise when you find yourself obligated to another lengthy stay with a company or software that isn’t working for you.
Why would a company do this, it seems counterintuitive to keeping customers happy and loyal? An “evergreen clause” traps you or makes you feel trapped. Why do they do this? Becuase it is more important to keep the investors happy than to pevent a customer like you from feeling discomfort or even anger. Being able to prove to investors that you will not easily lose customers is an important part of the picture toward getting investment money.
4) Data Migration
Another false assumption that can hurt you is that your history will be transferrable. Very few providers will do a transfer very thoroughly, often just bringing in the basic name-address-phone level of detail, not notes, schedules and other activities. Get clear with your provider what exactly they are willing to bring over for “free”.
5) Data Ownership and Retention
When you use Software as a Service, it should be crystal clear that the data is yours to do with as you please. That means that if you decide to go elsewhere, you should be able to get most or all of that data out in a useable format. While most providers will acknowledge your ownership of the data, they may not make it easy or be willing to help you get your data out if you should choose to leave.
The Wonders of the Cloud
Software as a Service, or SaaS, is a great model for security, convenience and flexibility. Just be sure that your SaaS provider has your best interests at heart, and that the contract that formalizes the relationship doesn’t include predatory, abusive clauses that could come back to bite you down the road! Expect that you have a real realtionship with the people behind the company. There are real people behind your SaaS. They can be a valuable part of your day to day support if that is part of the intentional culture of the SaaS company who serves you.