Buying into SaaS – what really matters to a CIO?
- Buying into SaaS platforms isn’t new, but many organizations still misunderstand what they’re getting into. Shivkumar Gopalan of Unit4 outlines what’s important (and what isn’t) and what's required from both the client and vendor to make it a success.
Over the last few years, at the company where I’m CIO, we’ve subscribed to half a dozen different SaaS platforms and the experience has confirmed to me just how different it is from buying license-based software.
SaaS turns the concept of buying business software on its head. With SaaS, you’re not buying a thing; you’re buying into a set of standardized business processes on a subscription basis – and you’re entering into a strategic relationship with the vendor.
This takes a completely different mindset from the old way of buying and implementing an application. To make it a success, companies have to make culture changes across the business, particularly in the IT department.
Here’s what in my experience really matters when buying into SaaS – if you want to hear more, I'll be expanding on these thoughts in a session at next week's Experience4U event.
Be prepared to standardize your processes
Ensure everyone, from the CEO to the users, understands that what you’re doing is adopting a set of standardized business processes. Many companies believe they’re unique and expect to have to customize software to the way they do things – this attitude has to be reversed.
When we bought into a social media / customer experience platform, for example, we changed the way we did things to fit in with the software rather than customizing it to fit our processes. Buyers should be open to the ways SaaS can evolve their operating models.
Of course, some processes are different for a reason and you may need to customize your SaaS to accommodate them. But it is possible to get “special” processes as standard by buying into an industry-specific variant.
Make sure these are end-to-end business processes and that ready-made integrations to other common industry applications are available in the software so it seamlessly integrates into other applications that are part of your enterprise architecture.
Make sure you’re buying true SaaS
Buyers need to be aware that there are some cases of “pseudo-SaaS” out there which are really only on-premise applications posing as SaaS. These come from traditional software vendors that simply implement their application on some infrastructure and give you access to it.
We had one experience of this when buying a subscription management service. The implementation process was very open ended. The vendor didn’t have much in the way of pre-built processes and asked us what we needed. This is when we realized it wasn’t true SaaS and pulled out.
If we’d gone ahead, I’m sure we’d have found that the implementation would have been long and expensive and that the ongoing software releases would consist more of bug fixes than innovation. We would also have had to spend time, effort and money managing the software, increasing the total cost of ownership.
A true SaaS vendor will bring you continuous innovation. They’ll understand how your industry is evolving, be aware of regulatory changes in the pipeline and constantly update their standard processes to keep pace. They’ll also keep their integration toolkits up to date with changes in other common industry applications.
Take a holistic view of costs
The cost profiles of SaaS and on-premise applications are very different and it’s difficult to get a true like-for-like comparison. With on-premise solutions, the up-front capital expenses and on-going running costs feel familiar. By contrast, if you’re not used to SaaS, it can feel like there is money going out the door every month.
It’s very important to look at the whole picture. For traditional solutions, don’t just look at infrastructure, hosting, support and licensing costs. Think about the hidden costs of carrying out continuous innovation on customized license-based software, or of users having to do double data entry because it’s not integrated with the other software you use.
Be careful whose ROI tool you use, as vendor tools are geared to proving a certain case. Personally, I use independent business case software which looks at the whole picture and gives you a more reliable perspective.
Also, make sure you read the small print of the SaaS contract. While the headline license may say 500 users a month, there may be limits on the volume of transactions or reports you can run without incurring extra charges.
Don’t underestimate the culture change required
Sometimes companies buying SaaS can be their own worst enemy. The IT department goes into it feeling like they’re giving something away, they have an opinion on every detail and want everything customized – which just makes implementation longer and more expensive.
It’s very important that all stakeholders understand what they’re buying into. These days, a good SaaS vendor will actually ask the buyer if they understand SaaS and if they don’t think they’re culturally ready, they’ll advise them against it.
The best SaaS vendors know the importance of change management and have the consulting skills to guide their clients through this process. One of our vendors pulled all the stakeholders into a meeting at the beginning of the engagement and told us what was going to happen. They had the confidence and experience to take charge and the implementation was a success.
My top tips for a successful SaaS implementation
- Understand that what you’re getting into is different.
- Make sure you’re using true SaaS.
- Take a comprehensive view of costs.
- Evaluate your integrations points with other SaaS solutions.
- Implement to be sustainable, with as much standardization as possible.
If you follow these principles, you should find that buying SaaS can bring significant benefits to your organization.
To follow all diginomica's coverage of Unit4's X4U digital experience visit the Experience4U 2021 event hub. The virtual event runs from November 16-17th and sessions will be available afterwards to view on-demand. Click here to see the agenda and register now.