Although SaaS has many advantages, just like any other technology, it is not perfect and there are a number of pitfalls that businesses can face, both before and after implementing SaaS. Detailed below are ten of the most common pitfalls that businesses can face, when implementing SaaS and what they can do to avoid these problems.
1. Not knowing what they are agreeing to
In most cases, SaaS service providers will provide clients with an agreement 'button' allowing them to sign up for a SaaS service provider's software services with very little hassle. A SaaS service provider will provide their terms and condition clauses to their potential customers, however most of the time, people cannot be bothered to read these long and drawn out clauses and usually end up clicking agree, without actually thinking about what they are agreeing to.
A business that is not properly controlled and does not allow information to be easily passed on between departments, could end up agreeing to something that would affect them negatively in the future or agreeing to something that they would just not be happy with.
To ensure that this does not occur, businesses should ensure that a representative from each one their departments that will be effected by the implementation of SaaS, reads their potential SaaS software vendors terms and conditions carefully. If all of the individual departments of a business are happy with these terms and conditions and are not affected negatively by these terms and conditions in any way, then a business can agree with their SaaS software vendor's terms and conditions because they now have a better idea of what they are agreeing to as a whole.
2. Paying more than they should be, for their software Services
One of the great things about SaaS is that a business does not have to pay massive upfront costs, in order to start using software services or SaaS based applications. Most SaaS service providers will offer various different payment plans to their clients, including monthly, quarterly or annual payment options.
Although the monthly option seems like the best option (because it gives a business more freedom than the other payment options), a business can actually end up paying more in the long term, when this payment option is used. If a business knows that they are going to be using a software application for a long time (a year or longer) and have the budget to pay for their software services annually, then they should select this payment option because they can save up to 15 percent per year, when compared to paying for their software services using the monthly payment option.
Another way in which businesses often end up paying more than they should is because they do not research enough, what software service or what payment option would be the best for them. For example if a business did not clearly know how frequently they were going to be using a software application, then they could end up paying more than they should be. In other words, if a business chose a pay-as-you- go payment model but used their SaaS software services frequently, then they could be paying a lot more, than if they had chosen a monthly payment option (which is likely to be cheaper for them in this scenario. To ensure that they chose the best payment option for themselves, businesses should make sure that they research and have an idea about how frequently they will be using their SaaS software services.
3. Not having a Service Level Agreement
Service Level Agreements are very important to a business, because they define exactly what level and quality of service is acceptable to them and what is not. Some software vendors will provide Service Level Agreements as a part of their main contract, while others will not. Even if a software vendor does provide a Service Level Agreement as a part of their contract, businesses should still modify any clauses that they are not happy with or even create their own clauses, so that a software vendor can better meet their requirements.
If a software vendor does not initially provide a Service Level Agreement, then it is up to a business to request a Service Level Agreement from their software vendor. Once again, if it is necessary, a business should modify this Service Level Agreement so that it better meets their specific needs.
Businesses should also ensure that the Service Level Agreement states what penalties a SaaS service provider will face, if they fail to deliver their software services to the agreed standard. For example will a SaaS service provider reduce the subscription rate of their client for the next month or will they give credits their clients in some other form. Once again, if this information is not present in the Service Level Agreement document, then a business should request it.
4. Not knowing how their SaaS service provider performs and what state they are in
Again, this ties into the not having a Service Level Agreement with any performance related clauses. However, clients should also request information about their SaaS service providers past levels of performance, uptime, etc. By researching into a SaaS service providers past levels of performance, a business can get a better idea of what levels of uptime, quality, etc, that their service provider can provide them with (rather than just having a vague estimate).
Businesses should also try to find out what state their SaaS service provider will be in, both in the short term and in the long term. For example is their SaaS service provider going to be making any investments within the next year, are they going to be merging with another businesses anytime soon or are they going to be enhancing the software services that they currently have on offer, anytime soon. All of these activities could effect a SaaS service providers clients, one way or another, therefore it is important that a SaaS service provider's clients know what state their service provider is in and also know what activities or tasks they will be carrying (at least for one year in advance).
Clients should also find out how they will be contacted if the performance or delivery of their software services is affected in any way and whether they will have to take any actions in order to receive the credits that they are entitled to. Finally a client should find out how long their SaaS service provider will have to fix any problems that do occur. For a business that needs to operate close to 24/7, a few days to fix a problem can seem like a very long time. Therefore, once again a business should ensure that their SaaS service provider can meet their needs, by fixing any service delivery problems within a few hours, rather than a few days (if they are a business that requires maximum uptime).
5. Not taking into account hidden costs
Although SaaS service providers do have cheaper upfront costs, they usually make up for these cheaper costs in other ways and if businesses are not careful, they can end up paying more than they should have to, defeating the whole purpose of implementing SaaS in the first place. To avoid having to pay unforeseeable costs in the future, a business should ensure that they carefully read their SaaS service providers fine print, along with their terms and conditions.
There are various hidden costs that a SaaS service provider could charge their clients, which may not immediately be obvious to a business. For example, some SaaS software vendors may end up charging their clients for configuring and setting up their software services for them. Other software vendors may charge extra based on what types of device that a client will access their software services from, such as charging extra for clients that access their services from a mobile device for example. Software vendors may also charge their clients extra if they go over their agreed storage limit and they may even charge them for technical support.
When buying SaaS software services a lot of businesses only look at the upfront subscription rate that they have to pay and forget to take into account the cost of additional features or add-ons. They often then end up having to pay more than they initially thought they would have to pay for their SaaS software services. To avoid this pitfall, businesses should make sure that they carefully research what their needs are and how much their SaaS software services will cost, taking into account all of their needs, as well as the purchase of any add-ons to meet these needs.
6. Not taking into account integration costs
In most cases, when a business implements SaaS, they will still have some of their existing on-premises software applications running in parallel with their new SaaS software services. This means that it is very likely that a business will want to integrate these two software services and applications together, so that they can work together.
Of course this may not be a straightforward process and can end up costing a business more then they initially thought it would (another hidden cost). Although a businesses SaaS service provider usually can deal with integration related issues, they usually charge quite a lot for this type of work. It may be more feasible for a business to use a third-party company that can carry out this type of work, because they will usually charge less than a software vendor does (in most scenarios).
7. Not knowing what their data rights are
Whenever a business uses SaaS based software services, at least some of their data will be stored on their SaaS service provider's data centers. Customers should ensure that the rights to access their own data still remains with them and they should also make sure that their data can still be recovered or restored, if their SaaS service provider went out of business for example (or if any other similar scenario occurred where a client would be at risk, of losing their data).
Finally, a SaaS service provider's clients should also confirm how their data will be secured by their service provider, from a privacy standpoint and a disaster recovery standpoint. Again, this links into the Service Level Agreement document and a client should ensure that both data security and data backup related clauses are included in their Service Level Agreement.
8. The lack of control that businesses have over SaaS software services
The great thing about SaaS is that it takes away the hassle of having to configure, maintain and upgrade software applications, for a SaaS service provider's clients. However, this can also be a pitfall, because businesses no longer have the same level of control over their software applications and data, like they have with their on-premises software applications.
For example a business now has to go through their SaaS service provider in order to access their data and the level of customizability for these software services also varies, depending on what level of customizability that their SaaS service provider will allow.
When using SaaS, businesses should make sure that they know exactly what level of customizability their SaaS service provider will allow them to have, as well as how much their SaaS service provider will allow them to configure and modify these SaaS software services.
9. Having to rely on the internet
Due to the fact that SaaS software services are delivered over the internet, a business has to ensure that their Internet Service Provider (ISP) provides them with an uninterrupted and high quality internet connection. The amount of available bandwidth that ISPs have also varies, depending on the time of the day. For example, during peak hours, it is a very real possibility that a business's internet connection will slow down significantly and this will obviously have an effect on the ability of a business, to access their SaaS software services.
To minimize internet connection related problems, a business should ensure that they have a high speed/high quality link, in place. Businesses that use SaaS should also consider implementing a dedicated internet connection, so that they don't have to share bandwidth with other users (of course this will require a larger budget). Finally, businesses should consider implementing a redundant internet connection, so that if their initial connection does go down or has a problem, then they will at least still be able to continue operating until their initial link is restored.
10. Not taking into account exit costs
This is another thing that businesses can easily overlook. However before signing their SaaS software vendor's contract, a business should look out for any exit related costs or they should carry out research to determine if they will experience any problems when backing out.
One thing to consider for a business is that if they signed a contract for one year but backed out half way through, would they get a partial refund or would they just lose the rest of their money for the remaining six months. Also would they have any problems getting their own data back that is stored on their SaaS service provider's data centers? Some SaaS service providers have exit charges and will charge their clients before they can actually get their own data back.
To avoid being stung by additional exit costs, once again a business should carefully check the fine print of their SaaS service provider's terms and conditions. Businesses should also try to keep as much control of their own data as possible and try to keep as much of their data in their own hands. By doing this, if a business does stop using a SaaS service provider's software services at a later date, they can easily back out without having to lose too much of their data (most of which will be stored on their own premises).
How to Accomplish SaaS
Migrating to a Software as a Service environment
Top 10 considerations when implementing Software as a Service
Top 10 pitfalls when implementing Software as a Service
Common SaaS problems that occur after implementation
Printed with permission from Emereo Pty Ltd. Copyright 2008. SaaS - The Complete Cornerstone Guide to Software as a Service Best Practices: Concepts, Terms, and Techniques for Successfully Planning, Implementing and Managing SaaS Solutions For more information about this title and other similar books, please visit Emereo Pty Ltd.
This was first published in August 2009