Home Blog How to Protect Your Company Against Unscrupulous Cloud Business Application Vendor Practices & EULA Games

How to Protect Your Company Against Unscrupulous Cloud Business Application Vendor Practices & EULA Games

Jon Roskill | June 25, 2019

Is Acumatica the antidote for bad cloud ERP vendor practices? CEO Jon Roskill thinks so and speaks plainly about the software industry’s dirty little secrets. 

From day one, Acumatica was purpose-built for the cloud, with the intent of future-proofing our platform for our users. Over the 10+ years we’ve been in the cloud ERP space, we’ve upheld our core beliefs of putting customer satisfaction and innovation first. I’ve watched as other ERP Business Application vendors ignore either one or both of our core beliefs in their race to profitability, and I feel it’s time to make a stand on behalf of unwary customers.

So, today, I’ll bluntly point out the six most common ways that other cloud and SaaS vendors may be misleading you with their software business and SaaS End-User License Agreement (EULA) practices and how you can protect your company.

Bad business practices by cloud business application vendors

These days, almost everyone knows what a EULA is. Techopedia defines it as “a license that gives a user the right to use a software application in some manner.” By digitally signing the EULA, the user agrees to the vendor’s conditions of use and agrees that this is the software vendor’s Intellectual Property (IP). These are those long agreements that people rarely read, but scroll to the bottom and click “Agree” almost by default.

Compensating people who create IP is a much more accepted practice today than it was 20 years ago. Conversely, there are those in the software industry who employ what I consider intimidation tactics in order to confer an advantage to themselves and their software solution.

Weighted EULAs and other bad business practices in the software industry are unfortunately common. Awareness of these tactics is the first step in protecting you and your organization from buyer’s remorse. Here are a few of the worst software industry business practices to watch out for:

1. The bait and switch

The “bait and switch” isn’t something new nor is it limited to the software industry. For years, businesses have lured customers in with grandiose promises and special deals and then pounced with the fine print. Software vendors are no different when they offer large discounts or low introductory rates which disappear in year two or three of the renewal agreement. They don’t discuss price increases, and why would they? If they told you to expect a 20-to-50% increase per year, you’d be running for the door.

They may also gloss over their inability to integrate seamlessly with their own business management applications or with the third-party applications you need to effectively run your business. Once you’re in, additional costs for these integrations often apply.

2. Implementation mayhem

The implementation process is always a key factor for companies seeking the right cloud ERP software. Two oft-asked questions are, How long will it take, and will it disrupt my business? Good questions that are not always answered honestly. The promise of a fast, easy implementation is a red flag—not because they’re impossible (Acumatica customers experience them often, see Fabuwood Cabinetry’s story) but because every business is different and has different requirements. The dynamic nature of this process cannot be understated.

If you add missed dates and not getting what you thought was included to the highly suspect promise that your ERP implementation would be fast and easy, you’ve got implementation mayhem. For instance, did you assume you would get training for your employees within the ERP implementation process? Think again. “Training” has become synonymous with “profit center,” with vendors charging $1,000 per day, per employee to get them up and running with their software solution. What about ongoing support? Open the corporate wallet once again.

This situation does not bode well for a successful, stress-free implementation.

3. Compliance bullying

Here’s one of the software industry’s dirty little secrets: they scare you into buying software licensing you don’t need in the name of compliance.

The SaaS end-user license agreement is often a multi-page document that is intentionally complex. Vendors then contact the users well after the sale to ensure they’re adhering to the EULA, and users are scared they’re not because the EULA isn’t clear, or they can’t prove that they’re in compliance even if they are. To alleviate this fear, the customer then overbuys more licenses.

But that’s not the worst part.

A fairly typical practice by many vendors is treating the EULA as a link rather than a contract. This means the vendor makes the EULA accessible via a website—a website that is constantly changing—and doesn’t adhere to the original terms in the user rights section. You basically bought software with an agreement that can be amended whenever the vendor decides it’s in their best interest to do so. And it happens often.

4. Data ownership woes

If you think you own your data, you’re probably wrong. Again, according to Techopedia, “The caveat of EULAs is that they do not protect the consumer, only the copyright owner. Consumers must never assume that their rights are protected by signing a EULA. In fact, the software vendor owns the license, and also legally owns the user’s private data entered into the software. Software providers may access private consumer data at any time, as well as read it or share it as they please.”

Does this concern you? It should. And so should the fact that you may have a fight on your hands if you want to leave your software vendor for whatever reason (e.g. merger/acquisition, rapid growth, desire to switch ERP vendor, etc.). You may have to sue to get your data back, and it can take years. (Google “favorite vendor name” data lawsuits for fun and see what you get.) If/when you do get your data back, it often arrives in a horrendous file format of 30+ flat files requiring reassembly.

5. Non-existent deployment options

Let’s talk about deployment options in relation to industry regulations. For example, if you’re in the Healthcare Industry, you must adhere to HIPPA compliance requirements. Unfortunately, they’re vague and they change.

When these changes occur, you may, for instance, find that you need to deploy in a private cloud solution rather than a public cloud deployment. The problem is, your vendor and their ever-changing EULA may not allow it. (Let alone the question—can cloud software vendors even do this?)

6. Improvement is a four-letter word

Finally, we see competitors who have gone into “milk mode.”

By that, I mean they’ve become complacent, letting their ERP product become stagnant. There is a lack of investment in enhancing their solution and a failing to utilize emerging technology. It seems “improvement” has become a four-letter word. The problem is, we live in a dynamic world, one that is experiencing constant technological advances.

This lack of improvement falls under the category of bad business practices. Customers—and their businesses—suffer when their ERP software vendor can’t or won’t keep up.

How to protect your company

At this point, you may be wondering if there’s a way to protect your company from shady EULA and software industry business practices. I mentioned earlier that the first step in protection is recognizing these practices. The second step is choosing the right cloud ERP solution, and that solution could be Acumatica. It’s the antidote for every bad practice you’ve just read about.

There are bad business practices out there, and Acumatica’s cloud ERP software is the answer. If you have any questions about Acumatica software or what we stand for, please contact our experts at any time.

Blog Author

Senior Advisor at EQT (Former Acumatica CEO). Passionate about sports, family, community and Cloud ERP with & thru the channel!

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