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By Jimmy Duan
Software as a Service (SaaS) is rapidly becoming the preferred model for small and mid-sized businesses (SMB) to afford the functions and values offered by enterprise-level applications.
The SaaS model brings two major benefits to SMBs. The first is drastically lower cost of ownership, which becomes even more apparent when all of the costs of installing, configuring, customizing, maintaining and operating the software are factored in.
The second is faster implementation times – days or weeks, as compared to months – which allows SMBs to focus on their core business competencies rather than on getting their systems working properly. In reality, it is always a challenge to match business processes to a software solution, and the best systems sometimes create wrinkles, even if they are managed properly. In order to get the most value from the SaaS model, it is critical to build a long-term, trusting relationship between customers and vendors.
Implementing SaaS can create challenges that organizations need to be aware of – and be prepared to address. One of the common issues is the lack of prioritized business objectives and acceptance criteria for the implementation, which can delay full implementation and increase the cost of ownership. A lack of the understanding of the implications of automating manual processes can also longer testing and transition cycles because of the higher expectations for data quality and repeatable business processes and practices. However, the most critical issue to address is a lack of trust between customers and their vendors. Without a strong relationship between both parties, it is difficult for SMBs to get the long-term values from the SaaS model.
The best way to overcome these challenges is for vendors and their customers to work together to establish some basic principles early in the relationship. As a first step, customers should understand their vendors’ business models and assess whether vendors are motivated to satisfy their needs and if they are capable of delivering an efficient solution. A good SaaS vendor must maintain high customer satisfaction and run its operations efficiently in order to achieve a high renewal rate and be profitable in the long run. Customers should also understand what best practices vendors provide, what configurations and customizations are feasible, and how to influence vendors’ product roadmaps for future enhancements.
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