Thoughts on choosing a SaaS provider

Have been trying to unpack some of my thoughts on Saas and Saas providers. Here’s the first pass.

1. Are the requirements met by the existing offering? Are add-ons, third-party modules required?

Understand how much of the native platform’s functionality will meet your needs and how much will have to be added on (and at what cost)

2. How open is the Saas platform to integrating with other applications?

If you have existing an application, say, which holds your master customer data like a CIF then you’d want to integrate the data rather than maintaining multiple databases

3. Is the platform extensible? Can new functionality be added and/or existing functionality customised?

You don’t want to invest in a niche-platform which will be limiting should you want to extend functionality later

4. What is the track record of the Saas provider and what is the vision?

Have a quick look backwards and forwards, you want a platform which has been around for a while and has a roadmap for growth.

5. Are you considering Saas because you really need and understand the benefits or are you caught up in the cloud hype?

In my view there are a couple of compelling reasons for going saas: you don’t want the hassle of managing infrastructure, you want to be up and running quickly and you need access from geographically dispersed regions (the common theme being avoiding effort and investment in and management of I.T. infrastructure)

 Zaheer Ismail

SaaS adoption

For all the benefits of SaaS, enterprise adoption may be hampered by a number of factors. These may vary from region to region but are mostly generic. These include total cost of ownership, trust and privacy, and application performance.

Let’s look at total cost of ownership. While infrastructure capital costs and subsequent running costs are avoided in the saas model. In an on-premise model, assume hardware, software and implementation comes in at $100k with recurring annual costs of $25k. For a SMBs/SMEs the saas subscription model is virtually a no brainer since it can be up and running in weeks and can scale as users grow assuming a modest user base of 40 users and say, a subscription cost of $50 per month. The annual cost is still under the annual cost of the on-premise model even before taking the initial costs into account.

In a large corporate environment the numbers are amplified but the cost progression is the same. At some point, as user numbers grow and the application is enhanced to cater to specific business processes, the subscription cost nears and then may surpass the on-premise cost.

The discussion with the executive then should be based not only on the TCO threshold but also on whether the enterprise is willing to develop and maintain a competence in IT infrastructure management. The case can be made for core business application infrastructure management while other functions such as CRM, billing, HR and marketing can be saased-out.

 Zaheer Ismail