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MenuWhat are the risks associated with giving up control of my software platform's source code?
I built a fully hosted SaaS platform that I license to clients on a subscription basis. I host the platform, perform maintenance, and run backups on a regular basis in exchange for a fee. A pretty typical SaaS model. One client is a publicly traded company and wants to gain control of hosting the software platform. An internal policy states that client data must be hosted internally. Giving up the source code and giving up direct access to the platform doesn't seem like a good option to me and seems to come with huge risks/liabilities. That said, I don't want to lose my client and want to find a solution. Is there a risk to surrendering the source code? What are some of my options? And what should I be thinking about during the negotiations?
Answers
I am not a lawyer, and I suggest you get one and ask this question of them.
When you have the lawyer write up the contract the best thing is to probably include a non-discloser agreement in it, that way they cannot disclose the workings of your code.
Next you will want the contract to say they are just licensig your code, they do not own it, they cannot change your code and resell it, nor can they reverse engineer it to re-create and sell it.
Those would be a couple of things to talk to the lawyer about. The lawyer will probably have more, the big thing is you want a contract that keeps this customer from taking your code and changing it to sell as something different.
Goog luck, and get that lawyer.
SaaS model are pretty interesting if you consider to give part of your source code. Referring to the risks i would list you some more important one, focused and at the point:
- Assumed your publicly traded company is vers skilled the most users will find it more difficult and less appealing to work with.
- It makes sense for you to use proprietary parts if you can do it in specialist fields maybe.
- If with this decision you are technically giving less Support but more focus that's should be an advantage. Meaning decreasing direct your operational costs
- Cloud software is slightly different than conventional software. As a general rule, you don't get access to the source code, even if the hosted software is built entirely on open source software. That may not make the software proprietary, strictly speaking, but it doesn't give you all the benefits of open source. In that sense, the benefits of using the "pay for what you use" software as a service model may outweigh the disadvantage of not having access to the source code (http://www.cio.com/).
If is not enough get a local lawyer to help you out. Let me know if you need more.
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