August 2010

Why EDUCATION is So Important to Software Negotiations or SaaS Negotiations

Think about it. One of the most important things to remember — maybe the most important thing — is that it is really important to educate your customer, partner, etc. about your Software or SAAS model when negotiating the software eula or SAAS contract (i.e. Software negotiations or SAAS negotiations).  This is important as with all IT based contracts the buyer needs to know what they are buying, as they are purchasing an ‘intangible’ item. As they can’t touch or feel it, it is incumbent on the seller to educate the buyer about  what they are selling, what the customer can expect, how it is paid for, how additional usage will be measured and paid for, etc.) as part of the contract negotiations.

So how do you do this?

• Put together a ‘simple’ document explaining your pricing and its methodology (or maybe a FAQ page), and put it up on the web (don’t forget to send this link to the person that is reviewing the Software EULA or SAAS contract).  This summary must me simple, and does not necessarily need to be very long or detailed (think bullet points, and short sentences).
• Be transparent and clear (this is not the time to hide anything).
• Educate not only the user of the technology, but also the person that is reviewing the contract (sometimes it is the same person, but not always).
• Make sure your Software EULA or

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What Does a Software/SaaS Company Need to Know About the Creative Commons License Program?

Any software or SAAS executive should learn about this, even if this does not affect their software EULA or SAAS contract. This is just one of those things to be aware of, because it is a big deal in the licensing of copyrighted material. So what do you need to know about this?

• What is the Creative Commons License Program. It is a new way to license copyrighted material, as essentially there is so much confusion out there regarding what people can and cannot do with content, images, music, etc (especially on the Internet). The fundamental idea is to try to find a more efficient way (trying to take out the intermediaries) to allow people to use copyrighted material through the use of icons/badges, a legal license and embedded code, and to move away from the concept of ‘All Rights Reserved’ to ‘Some Rights Reserved.’ More info here.

• How Does it Work? The creative commons is a non-profit organization that promotes the use of their free tools to allow people to license their copyrighted material in a much easier way (but it does not work for everything and every scenario).

• What Do I Need to Know About This?
  • First, the Creative Commons License Program should NOT be used to license software (they actually say this, so don’t take my word for it (see about 1/3 down this page)).
  • Second, I also

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A Software Lawyer’s Take on the Linux Foundation’s ‘NEW’ Open Compliance Program

On August 10, 2010 the Linux Foundation announced the Open Compliance Plan. So what is this all about and is this bad or good?

Essentially, the Linux Foundation created this program to address a lot of the FUD relating to using open source software with proprietary software. I think this is a noble objective, as there definitely is quite a lot of that FUD out there. So what are the components of the program (from the perspective of a of proprietary Software or SAAS company).

1) TOOLS

[Note to Self: need to check what OS these run on, as it may not be that useful for us]

• Dependency Checker – checks for dynamic and static links.
• Code Janitor – scans for certain keyword before the code is released.
• Bill of Material Difference Checker – provides the ability to more accurately track components of the software.

2) SELF-ASSESSMENT CHECKER 

• Here is the checklist. 

3) SOFTWARE PACKAGE DATA EXCHANGE (SPDX).

[Note to Self: While this sounds good on its face, it sounds like they are trying to lead the industry into disclosing all embedded open source software to (a) customers and (b) partners, etc. in the form of the Bill of Material  (not sure this is a good thing or even necessary; sounds like it will mainly add complexity and delay (at least in certain situations))]

• Black Duck Software is deeply involved in this Working

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While I know a little bit about SAAS accounting issues, there are people that know a lot more about it. I ran into Jay Howell (from BDO Seidman) at a recent SAAS seminar I presented at (regarding SAAS contracts) in Washington DC (he is the technical guru on SAAS issues at BDO), and I thought I would share some of his presentations and materials (really good stuff for you SAAS accounting/finance types). Any SAAS business should have the right person look at this, especially as these new rules took effect on June 15, 2010.

Before I give you the links, I thought I would share a few points that resonated with me.

1) SAAS Accounting Rules are Different. Yes, these rules are very different (like comparing an apple to an orange) from the typical rules regarding software accounting and revenue recognition (different rules and different interpretations). Don’t think of them as similar at all. (see page 6 of his presentation)

2) Less VSOE Proof Requirements. The good news is the SAAS accounting rules are less stringent on the requirements regarding VSOE, so this creates some additional flexibility for the SAAS model. (see page 8 of his presentation) Here is a definition of VSOE if you have not heard of it before.  Note to self: figure out how to use this flexibility.

3) More Flexibility in Sharing Your Roadmap with SAAS Customers. Typically if a software licensing company commits or says too much about …