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How to automate a SaaS agreement

Jeremy Huitson, 11 September 2020

Software-as-a-service (SaaS) agreements power the revenue growth of some of the world’s most exciting companies. Can automation help?

This deep dive is from our specialist blog, Superpowered contracts, and explores one of the most common contracts for legal teams at high-growth scaleups: the SaaS agreement.

We look at what SaaS agreements are, who they affect, how they’re agreed manually, and how and why to improve them through automation. Use the navigation below to find out more, or explore our deep dives on more specific contracts, like NDAs and MSAs.

What’s a SaaS agreement? | Who do SaaS agreements affect? | What’s the manual process? | How to automate SaaS agreements | Useful features | Handy integrations | Learn more

What’s a SaaS agreement?

Software-as-a-service (SaaS) is the business model behind many of the B2B tech titans that have reshaped how we work. Companies like Salesforce, HubSpot and Zoom provide their platforms on a subscription model that guarantees recurring revenue, rather than on-premise solutions that are bought once and installed.

A SaaS agreement is the commercial contract that sets out the formal relationship between the SaaS company and its customer. It may take the form of a contract covering a pilot or trial period, or it may be an auto-renewing annual subscription supported by an MSA (which could be considered a subset of SaaS agreements). What these contracts have in common is that they facilitate the provision of services to the customer in exchange for recurring revenue to the business.

Who do SaaS agreements affect?

SaaS agreements typically involve various stakeholders in different teams across a business, usually including:

  • Legal counsel. The in-house legal team will own the template and guard against risk to the business, making sure that versions are controlled and terms are favourable.

  • Salespeople. Account executives and sales managers are responsible for securing signatures on SaaS agreements – and they’ll want to do it as quickly as possible.

  • Sales operations. Sales ops managers typically own the process through which SaaS agreements flow – particularly if the business uses an integrated workflow with a CRM like Salesforce.

  • Approvers. Depending on the company’s stage and size, various people might need to approve the contract. These could include customer success or product teams (if there were feature commitments, for example) or finance leadership (if there are bespoke billing/invoicing arrangements that might affect forecasting).

  • Authorized signatories. Who this is will vary from company to company.

  • Customers. The end-user buying the software is of course a key stakeholder in the contract.

 

Despite the advent of in-browser contract collaboration, most businesses – even in the innovative SaaS world – still manage contracts using a manual process

What’s the manual process for SaaS agreements?

Despite the advent of in-browser contract collaboration, most businesses – even in the innovative SaaS world – still manage contracts using a manual process spread across several tools. Friction, risk and data loss are all commonplace. And the process usually looks something like this:

A salesperson has a potential customer who is ready to see a contract. They hunt around for the latest template in a shared drive, find a Word document and change some text, before sending it to the prospect. Negotiation happens in tracked changes, over email or by phone.

Eventually the contract is sent to legal to be reviewed. They point out that it was an old template and make changes accordingly. These changes go back and forth between the company and the prospect. When both parties are finally happy, the contract is converted to a PDF to be signed with an eSignature provider. All the negotiation data is lost. The signed contract is emailed to all parties and saved to a shared drive.

 

Why it’s painful to manage SaaS agreements manually

The manual process can cause delay and legal risk, as well as giving the counterparty a bad experience. There are typically four key pain points:

Multiple tools lead to bottlenecks

Many SaaS companies are venture-backed, with aggressive growth targets for revenue. If sales reps need to chase contracts across email, Word, shared drives, Slack and DocuSign to close a deal, it will slow things down and hold things up. Sales should be focused on one thing: closing.

File-based workflows lead to data loss

Contracts that live as PDFs or Word documents are static files, meaning that metadata isn’t tracked through the contract lifecycle. Pre-signature, this means that key negotiation data and other important information isn’t recorded. Post-signature, it makes it hard to find contracts that have been agreed and to know what’s in them. This creates legal risk for the business and can have serious consequences.

It will go from bad to worse

Successful SaaS companies tend to scale quickly. If contracts (managed manually) are painful when you’re signing 10 a month, what will it be like when that number hits 50, 100 or 1,000? It’s crucial to fix this workflow before it gets too far out of control.

Integrations can cause headaches

SaaS companies that send out lots of agreements will often integrate their contracts process with their CRM (typically Salesforce). It’s a huge amount of work to set up and maintain Word templates that are up to date with the latest data in Salesforce – for many companies, this is at least one employee’s full-time job. It’s not fun for the person doing it, nor is it a great use of budget.

 

The first step to an automated workflow that ends the pain of manual processes is to create templates to enable self-serve.

How to automate SaaS agreements

Who owns SaaS agreement templates?

Although SaaS agreements involve numerous stakeholders, binding obligations that these contracts create mean that they are usually defined and controlled by legal.

The first SaaS sales contracts that a business issues are usually created by external counsel. Once in place, these contracts are then adjusted and maintained by the business’s in-house legal team, who will take regular advice on regulatory and compliance developments that might require a change to standard terms – like GDPR or anti-money laundering obligations.

Who creates SaaS agreements?

Salespeople at SaaS companies are the main creators of SaaS agreements – or at least, they should be. A SaaS agreement might incorporate an order form with an appended MSA, bespoke licence agreement or enterprise package. The size of the deal will likely dictate whether salespeople are empowered to self-serve or whether they need to involve sales leadership or legal counsel. If the contract collaboration platform is easy to use and there’s a robust approval workflow in place to minimize risk, then junior salespeople may be able to self-serve.

A self-serve process, with a transparent approval workflow, means sales don’t feel like they have to wait on legal for SaaS agreements to be approved

Who approves SaaS agreements?

SaaS agreements create recurring obligations for both company and customer that obligations could persist for years, and with wide-ranging consequences. For this reason, a company’s in-house legal team will usually retain approval rights – particularly if there are deviations from standard terms.

Other stakeholders who might want approval rights over SaaS agreements include:

  • Customer success teams. Any commitments around professional services, training or ongoing account management will need to be reviewed by the team responsible for delivering them.

  • Product and engineering teams. Software companies, especially in startup or scaleup mode, might make contractual commitments to ship certain features, to assure a potential customer and encourage them to sign.

Who are the authorized signatories?

Authorized signatories could range from sales managers to CEOs, depending on the size and structure of the company. If an automated workflow has native eSignature, then authorized signatories can quickly and securely sign deals that have received legal approval.

 

Useful features for automating SaaS agreements

Users looking to end manual processes for SaaS agreements would be interested in the following features from their contract collaboration platform:

  • Locked templates. Once legal have defined the commercial terms of SaaS agreements at the template level, they would want to prevent their sales teams (in most cases) from deviating from these.

  • Locked approval workflow, with defined roles for legal, CFOs and signatories. The best approval workflows are sequential triggered, which means multiple approvers can be notified in a specific order. This prevents users departing from standard terms and gives visibility to those who need it.

  • Smartfields. These contain contract metadata, making sure key fields like dates, values, names and addresses are tracked and searchable. They should also live-sync (in both directions) with whichever CRM the SaaS company uses (typically Salesforce) to make sure data is always accurate.

  • Defined playbook. This provides contract stakeholders with alternative clauses and fallback negotiating positions and is built using conditional logic.

  • Internal commenting. If standard terms are to be varied, it’s useful for internal stakeholders to be able to collaborate in real time on the document, without needing to worry about audit trails and version control.

  • External redlining. Counterparties need to be able to negotiate SaaS agreements without having to move the document into Word, where you’ll lose your audit trails and data.

  • Visual timeline. Approvers and signatories often want to scroll back through negotiated versions to keep track of changes and variations. A visual timeline will allow them to do that intuitively.

  • Two-way data sync to CRM. Only a two-way integration with live data sync can ensure that information is accurate across both contract and customer relationship management. This helps to avoid error and double-work on data entry.

 

Handy integrations

  • Salesforce. As the dominant CRM and system of record for most high-growth SaaS companies, frictionless integration with Salesforce is vital. Sales teams can create contracts without leaving Salesforce, safe in the knowledge that legal has oversight. The integration should be two-way in case data changes during negotiations.

  • Slack. Many SaaS companies live in Slack, with most internal comms and collaboration happening there or adjacent to it. A Slack integration means users can track their SaaS agreements’ progress and celebrate together when deals are signed.

  • Companies House. The best contract automation solutions allow UK users to use the Companies House API to make sure data, such as a company’s legal name or registered address, is accurate.

  • Google Drive. An integration with the team’s shared drive means agreed terms are auto-downloaded when fully signed and securely stored.

 

Why automate SaaS agreements?

An automated workflow for SaaS agreements can remove a huge amount of work from the legal team’s plate, and create lots of benefits for the business. These include:

  • A system of record. With all contracts generated, negotiated, approved, signed and stored in one system, visibility pre- and post-signature is no longer an issue.

  • Enabling your sales team. A self-serve process, with a transparent approval workflow, means sales don’t feel they have to wait on legal for SaaS agreements to be approved.

  • Giving legal their lives back. Similarly, legal don’t have to crawl through email chains to unearth risk or harangue sales colleagues to check they’ve used the latest terms. Lawyers can enable the business instead of blocking it, all without losing control.

  • One audit trail. When the agreement is up for renegotiation, it’s clear how and why any changes were made last time.

  • No double-work. Automation means you won’t have to enter data over and over into contracts and CRM; paperwork is synced across both systems.

 

Achievable time-savings

Juro users report an end-to-end time saving for their automated SaaS agreements of 75 to 96 per cent.
Achieving these numbers will depend on how complex both the documentation and the workflow being automated are, but end-to-end contracting times of minutes, rather than days or weeks, are not unheard of. SaaS agreements for deployments of thousands of enterprise licences will usually be highly complex; automation is better suited to simpler SaaS agreements, where there’s minimal risk involved in letting sales self-serve.

For the best results, any automation solution needs to be adopted fully, rather than suffering from a slow and patchy implementation.

Read more about companies like Unbabel, Masabi and Shieldpay who achieved significant efficiencies by managing their SaaS agreements with Juro.

Is managing sales contracts a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?

If so, try Juro and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.

Topics: Contract magic

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