Software-as-a-service is just about the most-discussed topic in software these days. It'll probably save you money and lead to faster implementation, but it's not always a no-brainer. Here are 12 things to think about before choosing a software-as-a-service application.
1. Mission critical.
Don't use software-as-a-service for any application your company cannot do business without -- unless you're sure the vendor can support it better than you. "You shouldn't get SaaS for any application where your entire company is depending on that application running successfully all the time, and you feel that you could not get the reliability or the performance that you require except by controlling it yourself," says consultant Amy Wohl.
A stock brokerage, for example, should keep trading software in-house. But a large company might have 100 applications that it absolutely cannot run the business without, she says.
Many customers are apparently confident in the ability of software-as-a-service vendors to support mission-critical applications. Saugatuck Technology says 49% of enterprises plan to deploy mission-critical software-as-a-service apps over time.
2. Pay as you go? You wish.
We all know software vendors are addicted to up-front licensing payments. A major selling point of software-as-a-service is that monthly payments force vendors to continually improve service and satisfy customers. But most software-as-a-service vendors are actually turning this model on its head and forcing customers to pay fees for as much as a year in advance, says Jeffrey Kaplan, who runs the consulting firm THINKstrategies.
"Traditional software customers are tired of parting with their money before they receive the benefit of the application," writes technology blogger Ken Boasso. "When SaaS vendors act like traditional ISVs by requiring up-front annual payment, even offering deep 'time-value' discounts, customers want to know how SaaS is different from the same-old, same-old and if there's something wrong with it."
3. Don't assume your data will be safe.
Make sure the vendor has a reliable way to back up data in case there is a disaster or the vendor goes out of business. If sensitive data is involved, you want the vendor to have contingency plans for backup and recovery and service agreements that include harsh penalties for losing or exposing data.
Ideally, customers should find a way to escrow the application itself so there is a copy, Wohl says.
Customers "really need to understand the SaaS infrastructure underlying the delivery of the SaaS solution," says William McNee, president and CEO of Saugatuck Technology.
4. But software-as-a-service could actually improve security.
Software-as-a-service allows companies to cooperate with business partners without exposing their internal networks. "A lot of companies don't want those people wandering around inside their firewall," Wohl says. Another beneficial side effect is that software-as-a-service can give companies the off-site backup of data required by various government regulations, Kaplan says.
"We need to have off-site backup of our data to be compliant -- lo and behold, software-as-a-service with its off-site hosting solves that problem," Kaplan says.