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What is SaaS?

The acronym SaaS stands for Software-as-a-Service.  SaaS is a software delivery method that is hosted remotely and provides access to software and its functions as a Web-based service.  In other words, it’s remote access over the web to a software application that you lease rather than purchase.

What are the advantages of SaaS?

There are many advantages to SaaS for the user.  There is nothing to install and no hardware requirements to keep up with.  If there’s a problem, it’s the SaaS provider’s problem, not yours.  There is nothing to maintain.  Upgrades are taken care of automatically.  Backups are done automatically by the SaaS provider.  You can also do data backups if you so choose, but it’s not necessary.  Deployment is simple – you are up and running in minutes instead of days!  SaaS scales easily to match your organization’s growth pattern.  You pay for growth when and as it happens. You don’t have to hold and pay today for what you think you’ll need tomorrow.  Users have instant, secure access to critical data 24/7/365 regardless of where they are physically located.

How does SaaS differ from Application Service Provider (ASP)?

Application Service Provider (ASP) is a software delivery model that came on the market in about the year 2000. The ASP generation was the traditional client-server applications hosted by third-parties who ordinarily did not have application development expertise.  They were only managing servers. Because the applications were not written as net-native applications, performance was poor and application updates were no better than self-managed applications. By comparison, current net-native SaaS applications or independent portions are updated regularly, many daily. (Wikipedia, “Software as a Service,” http://en.wikipedia.org/wiki/Software_as_a_Service)

How does SaaS save you money?

The first question is probably “Does SaaS save you money?” and the answer is “It depends.”  First look at the extraneous costs, such as setup, training, storage limits, integration, hardware, etc.  Then look at your internal resources, such as personnel, expertise, IT facilities, budget (capital versus operating), etc.  Be sure to look at whether the functionality is part of your core mission and whether you can risk giving up absolute control over the functionality?  If it is not part of your core mission, then look at whether you can afford to develop expertise and allocate finite resources to owning and managing non-core functionality and the infrastructure to support it?

What are the typical fees for SaaS?

SaaS is a pay-as-you-go lease.  Fees are typically per-use and paid monthly in advance.  They can be per-user, per transaction, or a fixed amount per month.  Per-user fees are easy to verify; find out if there are any charges or rebates for terminating a user and whether you can reissue that user license.  Per-transaction fees are tracked by the vendor and periodically billed to the customer; you should understand how the back-end billing mechanism works and if you can verify the charges.  Fixed-fee- per-month is easy to verify; ask if there is a discount for paying quarterly or annually.

What is the SaaS value proposition?

The SaaS Value Proposition is leveraging operational requirements by outsourcing non-core mission requirements to experts, reserving internal expertise for your primary mission, and reallocating assets to your core mission.  

What is the #1 factor blocking SaaS adoption?

Trust – giving up control in exchange for benefits – is the #1 factor blocking SaaS adoption. 

What are the keys to success with SaaS?

The two most important things to look at when considering SaaS are (1) the contract and (2) the vendor’s corporate culture. 

Why is the SaaS contract so important to success?

Your relationship with the SaaS provider is defined in the terms and conditions of the contract you sign…more so when you lease instead of purchase software.   Terms relating to data security, data mining, cancellation, exit strategy, data ownership, data mismanagement penalties, backup policies, etc. take on much greater importance with SaaS. 

Why is the vendor’s culture so important to success?

When you purchase software, you get physical possession of a product.  When you lease software (SaaS), you get a contractual relationship with a vendor.  The corporate culture of a product vendor is to develop requirements, install the product, leave the premises, and return only if there’s a problem.  The corporate culture of a service vendor, however, is to develop requirements and deliver customer service 100% of the time.  With SaaS, you need a vendor with a track record of delivering exceptional customer service all the time.  Sometimes even above and beyond the contract requirements!

What should you watch out for when leasing software?

Read the contract.  Don’t just give it to your attorneys for review.  You might not understand everything, but you will have a greater understanding of what you’re signing up for.  Ask if there’s a discount for annual or quarterly payments?  What’s the uptime availability?  Does it include maintenance downtime?  What kind of notice do you get about planned downtime?  How often is the application upgraded?  What’s the data management approach?  Can you use a third-party to provide an interface to the application?  What are the data rights policies?  How fast can you exit and how much does it cost?  Are there any add-on costs?