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The questions A/NZ businesses need to ask before diving into SaaS

13 Mar 2019

Article by Rimini Street APAC GM Andrew Powell

We’re truly in an era of everything-as-a-service. Being able to add ‘as-a-service’ to whatever you’re selling has become an easily recognisable way for cloud companies to boost the appeal of their solutions. It’s meant to imply a lower total cost of ownership (TCO), faster deployment, and more broadly, a sense of ‘we can take this off your plate.’ 

Software-as-a-Service, or SaaS, was one of the first cabs off the rank in this relatively new phenomenon. Gartner recently predicted global IT spending would grow by 3.2 per cent to US$3.8 trillion in 2019, with SaaS being a key driver in almost all software segments as businesses continue to increase focus on better customer experiences. 

Australia and New Zealand are expected to be accountable for no small part of this expenditure – IT spend across the two countries is due to surpass $100 billion this year, with SaaS being a major driver for the continued expansion.

Before A/NZ businesses dive deeper into SaaS in search of the great business outcomes it can provide, they would do well to ask certain questions to make sure they know what they’re getting and at the best price point:

Is the product pure SaaS, with a multitenant architecture?

A true SaaS vendor uses a single code base for hosting all its customers or ‘tenants’. This common infrastructure reduces the cost and complexity of managing each software instance, and economies of scale are passed down to you – this is particularly useful if you’re starting from scratch and your organisation does not already have a cloud footprint to fit into.

The caveat to this, of course, is that you’re not really getting a bespoke product – but many businesses do not need a customised application for standard business processes that do not differentiate them. The danger can be where SaaS vendors mimic the rhetoric of cloud efficiency but are actually running different installations of their software for each instance. If your costs are higher than expected, this may be why.

Who is hosting the application?

Buying from a SaaS vendor doesn’t necessarily mean they’re hosting the software behind the application itself – some vendors use other firms such as cloud and data centre companies to provide backend infrastructure and operations. For example,  SAP’s S/4HANA Cloud is sold directly by SAP and run on the public cloud through providers such as Amazon Web Services (AWS).

This is not the best and most efficient approach in our experience – it adds an unnecessary middleman and upgrades can be delayed with this approach. Customers should read the fine print in what exactly is being hosted and by whom.

Are you getting the flexible contract you expect?

One of the earliest selling points of the as-a-service cloud movement was freedom from large, up-front expenses. However, the flexible, month-to-month contract nature of SaaS is not always what it seems.

Organisations that delve into the SaaS model have a tendency to start relying on it heavily very quickly. This can lead to ‘data gravity’ taking effect. The more data you have in the cloud, the harder – and more expensive – it is to get it out. Further, SaaS contracts are often intentionally steeped in complexities, making it even harder for customers to leave. This defeats the entire purpose of the cloud’s supposed ability to free businesses from long-term lock-in contracts.

Is the pricing clear and transparent?

This might sound like a no-brainer, but many SaaS vendors don’t actually publish their pricing. This is less of an issue with born-in-the-cloud vendors, but many providers that started internally and then moved to the cloud avoid publicising their prices to give more control and reduce customers’ ability to compare costs.

Beware of too-good-to-be-true offers and be aware of what to expect in terms of future price increases.

Can you try before you buy?

Most SaaS companies provide access to demo systems to let you kick the tires and determine whether the application is a good fit. However, be mindful of tightly-controlled demo processes. If there is a delay or caveat that you must set up an appointment with a sales rep, or anything suspicious of that nature, all may not be what it seems.

While it’s important to remember these questions, don’t let it deter you from all the positives SaaS can bring, especially in targeted, high impact areas of the business like sales, digital and distributed operations where SaaS benefits are highest. 

A/NZ businesses are fast adopters of technology and if they can get their SaaS environments in order, it can lead to increased efficiency, better business processes and bring us closer to technology deliver the convenience and simplicity we all crave without blowing out the bank.

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