Looking for SaaS company evaluation criteria
Therese
is extremely impressed with their crm software product, and their
references are great, however, they are a smaller company (which might
be a benefit) and we are trying to validate their corporate longevity.
Any suggestions welcome.
Edy
to a browser-based user interface, or just simply modifying their
marketing collaterals to suggest that they either invented or now
embrace “the cloud” is alarming. To many CRM software vendors think
they can hijack the loosely defined buzzword of “cloud” for their
marketing propaganda or even think that they can quickly get up and
running as a SaaS provider by simply putting their legacy application
in the cloud.
Despite the vendor short sightedness, too many IT buyers are short
changing their software selection process and then paying the price
after the fact.
The idea of offering application software over the Internet did not
come along with the advent of SaaS. But properly delivering SaaS
business applications requires fundamental changes in the way software
is written, deployed, consumed, maintenance and upgraded.
While several software as a service CRM vendors do a remarkable job in
running innovative businesses and satisfying customers, I see many
other software publishers making common mistakes when initiating or
evolving to a SaaS model. Here’s a short list of the more common
mistakes (as well as the issue that will run a SaaS company into the
ground).
SaaS companies stop working when they fail to understand that a SaaS
provider is a services company, not a product company. This is clearly
a fundamental change from the prior software licensing era. Sure, most
cloud vendors understand that the upfront software licensing fees will
be replaced with the subscription pricing model, but too many fail to
also understand that the ongoing operational burden of running,
maintaining and insuring project success is now their responsibility.
The days of (often correctly) informing the customer that the system
is not working or successful because they failed to meet their
commitments are over. The cause of failure doesn’t matter as the only
thing that matters is that if the customer is unsuccessful for any
reason they are likely not to renew their annual subscription – and
then the SaaS vendors business model doesn’t work. SaaS has for the
first time in business application history created the true customer-
vendor partnership, which is best achieved when there is a financially
vested relationship.
Redeploying client-server applications into a shared services data
center is not SaaS – nor does it achieve the SaaS value proposition. I
don’t want to offend the many Sage or Microsoft ERP partners that
think they can build scaling business models by moving Dynamics GP,
AX, NAV or SL to a data center and offering a subscription pricing
model, particularly as the number of VARs pursuing this model seems to
grow every week, but this simply doesn’t compete well with true thin-
client, multi-tenant CRM or ERP business software applications.
Porting fat client applications to the Internet and putting lipstick
on the pig also doesn’t work. I’m amazed at the number of CRM and ERP
software vendors that still think they can port a fat-client or client-
server application to a new delivery model, add a browser-based UI and
expect to make it big in the SaaS market. These applications always
result in long implementations, very high maintenance, difficult user
adoption, challenging upgrades and poor performance as they are trying
to move significant I/O traffic over the limited bandwidth of the
Web.
Forgetting the on-boarding support will also fail the business. The
SaaS business model requires more than just great hosted software.
Also needed are ancillary support and operational systems for
provisioning, on-boarding, billing and support. Fail to incorporate
the necessary support processes and systems and either the user
adoption or a sustained user experience will fail.
Forget that you have to earn the customers business every day and the
business will fail. While SaaS CRM software systems are not as easy to
change as what many think, they are certainly easier to replace than
on premise packaged software. The absence of long term contracts,
shortened implementation timeframes and straightforward data
migrations between cloud-based systems give customers new options for
new solutions in shorter timeframes. SaaS vendors must earn their
customers business at least every month. Without long term contracts
and fork lift implementation requirements, the goal is clearly to
ensure the customers want to stay with you as they no longer have to
stay with you.
Software downtime will down the business. Software as a service
customers expect 24/7/365 uptime. Frequent short outages or prolonged
single instance outages will damage a cloud vendors reputation, put
the vendor in the news (in a very unfavorable fashion) and put
customers in the mode to search for more reliable alternatives.
An information security breach will result in sure fire customer
attrition. The SaaS industry has done an impressive job in avoiding
security breaches. For the cloud computing vendor that fails to
maintain this impressive record, there will be no forgiveness.
Independent security audits and attestations such as the ISO 27001 are
by far the best assurance against data compromises.