Businesses worldwide are adopting SaaS applications on a rapid scale due to their inherent simplicity and ease of use. However, it is important to consider various factors such as costs, liability for data loss, disaster recovery, and regulatory compliance before choosing the right SaaS platform for your business. Let’s look at the top considerations for businesses looking to onboard new SaaS solutions in 2022.
According to StatistaOpens a new window , the average number of SaaS applications used by organizations worldwide stood at 110 in 2021. That is a 37% increase over the year prior and miles ahead from 2015, when the average organization ran just eight SaaS applications. This indicates without a doubt that enterprises have recognized the benefits of SaaS versus traditional locally hosted applications.Â
One of the differences between locally-hosted and SaaS applications is how we financially acquire the software. Rather than purchasing software, customers must agree to subscriptions or time-based contracts. Because the software doesn’t require installation, it streamlines the onboarding process and greatly simplifies the purchasing process as the purchaser no longer needs to worry about technical prerequisites to installing the software. Because many software providers prominently post their pricing upfront, the purchasing process appears to be relatively cut and dry.Â
So are there any measures that organizations should take before stepping into a SaaS contract? The answer is a resounding yes. Let’s look at some factors businesses should consider when selecting a new SaaS solution.
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Top Considerations for Choosing a SaaS Solution For Your Business
Better liaisons between internal IT and business units
The growing permeation of shadow IT throughout organizations today is a clear signal that Internal IT can no longer be an island. In the past, the IT department was viewed as a roadblock to onboarding solutions that managers deemed fit for their business units. In some cases, the IT department may also have resisted the transition towards SaaS solutions out of concern or fear of losing relevance.Â
However, businesses need to hit the street immediately and decisively to succeed in today’s competitive environment that is dynamically changing at a rapid pace. This often requires being the first to market, and there is no time to wait patiently for IT to come around. Today’s enterprises are witnessing a dramatic shift in how users consume technology, and IT teams should embrace it because, with so many SaaS options available today, users have started taking the wheel without notice to get the job done.
While technical expertise may not be needed for the solution-building process, IT still has valuable insights and knowledge about selecting cloud alternatives. Just as professional sports athletes need an agent to maximize their contract value, business units need Internal IT to help them navigate through issues such as consumption plans, service level agreements and compliance issues. IT needs to create close liaisons with all business units and understand their objectives to serve as their professional agent.
By serving as the technical representative and complimentary advisor, managers and organization leaders will come to trust and appreciate the advice of internal IT. Working closely with IT teams will also help businesses match their needs with the optimal SaaS offering and escape any possible issues over the length of a contract. Â
Dates and time units matter
While it certainly seems obvious, every SaaS contract should include an official start date and end date. Business users should understand the renewal or termination processes involved with the end date. Do they have to notify the SaaS provider in writing to terminate the agreement? Are contracts renewed by default? Are renewal or termination notices required within a stated notification length specified in the contract? They should also know if there are any exfiltration costs if a contract is terminated or transferred to another vendor.
Every professional athlete knows when their next contract is due and how much leverage they have. You should, too, regarding your SaaS contract. You never want a contract automatically renewed for an application you no longer need, and you certainly want to know the exact date that you can bail out of a contract involving an unsatisfactory experience. You might also be able to negotiate a better price by renewing in advance of an end date. Â
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Understanding the billing process
It is imperative to understand how you formulate your bill. If it is based on the number of licenses you need, you should perform an audit before the renewal date to determine your updated licensing needs. Never do a blind renewal. If your billing follows a licensing model, your costs remain static for all billing cycles. Many SaaS providers use a consumption model, which means that customers pay for the resources they use. In these cases, you need to know how to determine your billing units and consumption metrics to contain costs. It’s also crucial to know about any thresholds and understand the potential financial consequences of exceeding those. Be sure to document when your billing cycles are to make it easier for budgeting and ROI determination.
The application is more important than the cloud
While there are many benefits for cloud delivery models versus traditional application hosting, always ensure that application needs come first. An application that doesn’t fulfill the needs of the business is of little value regardless of how it is delivered. Make sure the application works and don’t just be wowed by its cloud features. Take advantage of the onboarding simplicity of SaaS by requesting a free trial involving several test users so you can kick the wheels per se. You should fully evaluate the application’s features and focus on measurable results. It is better to stick with a proven application to get the job done than go with a SaaS alternative just for its cloud capabilities. Â
Do your homework on the provider
Every business should be concerned about its suppliers’ stability, including SaaS providers. Consider the consequences to your business if the provider of your mission-critical SaaS subscription goes out of business. It would be best if you also understand the dependencies of your SaaS provider. For instance, do they depend on an IaaS or PaaS provider to deliver their software? Know that a startup company offering discount pricing involves a level of risk versus a provider with a proven history of financial stability.
See More: 4 Practical Ways to Tackle SaaS Sprawl Effectively
Disaster recovery
Disaster Recovery is a two-way street when it comes to SaaS. Some SaaS applications may require an on-premise VPN or security device to encrypt data between the office and the provider’s data center. It would be best to have a plan outlining what you will need at a temporary recovery site to continue service. You should also inquire about the DR plans of your cloud provider regarding its resiliency architecture and how your data is backed up and replicated in the event of a disaster on their part.
Compliance Issues
Since the European Union implemented GDPR, many other countries and states across the U.S. have since enacted their data privacy regulations. Thus, it is vital to understand if you must abide by any industry requirements or compliance regulations. Don’t be afraid to ask a cloud provider to list the security procedures and controls they use to protect customer data. In the end, you will be responsible for incidents involving personal data that they host.
Conclusion
SaaS may reduce the complexity of application hosting and support, but there is still a lot that goes into deciding on a SaaS provider. A contract of any type is serious business, so be sure to approach your SaaS contract with the same vigilance you apply to others.
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