10 Questions to Ask, Pre-SaaS

Oct. 31, 2007
The question is more complex than "Can X process my files in their current format?" The decision to outsource virtually any processing task raises a number of significant issues that must be resolved before a deal can be struck

The "Software as a Service" (SaaS) business model has a certain allure: rather than making massive investments in software to automate business processes, and hardware to run the software and highly trained personnel to run the hardware and the software, simply rent the software from someone else and let them worry about the maintenance and support questions -- and that massive investment. Instantly the capital expense budget looks better, as does payroll. The IT staff has more time to innovate, rather than simply troubleshoot. But the SaaS model may not be the answer to all our technological prayers.

SaaS vendors make money selling "one size fits all" solutions. If your needs are unique -- or if they simply fall outside the offerings of Vendor X -- he/she may not be able to help you, unless you are ready, willing and able to revise your internal processes. But in that event, X may not be able to provide you with consultants to assist with the redesign. X sells a software service -- standardized, specialized software - not consulting.

But the question is more complex than "Can X process my files in their current format?" The decision to outsource virtually any processing task raises a number of significant issues that must be resolved before a deal can be struck:

Will my data be secure? This question is of particular importance if the data is valuable (e.g. trade secrets) or protected by law (e.g. certain types of health or financial information.

Will the service be available when I need it, and will it give me answers within an acceptable time? Clearly a system will be of limited value if it is routinely down for scheduled maintenance when you want to perform crucial calculations, or if you could perform those calculations more quickly with a slide rule.

If the system fails, how quickly will it be restored?

Put another way -- how much productivity can you afford to lose?

Can the systems be relied upon to provide consistent, accurate results?

What will it cost to train my personnel to use the service?

Once I've signed on and am dependent on the service, am I protected against unexpected price increases?

What are the vendor's plans for disaster recovery and data backup? If a tornado flattens vendor's server farm, will you be out of business?

If vendor goes out of business, or drops the service, or changes the terms or price in an unacceptable manner, what is my "Plan B"?

If things go wrong, what remedies will I have?

All this is not meant to suggest that the SaaS is a fundamentally flawed business model, for SaaS products can be remarkably useful and valuable. Rather, care is needed, care that increases in direct proportion to the importance of the SaaS service to the success of your business.

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