The world of business software and services used to be pretty straightforward. Software arrived in boxes, programmes were manually loaded onto local servers via a CD-Rom. Company IT departments were tasked with managing and maintaining services.
It could be a time-consuming, resource heavy and expensive way to work, but it conformed to our traditional business conventions – physical items being traded between buyers and sellers. But technology is at its best when challenging our traditional ways of doing things – and that’s exactly what the growth of SaaS (Software-as-a-Service) has done.
With fast and reliable broadband connections and the development of cloud technology, the idea of loading code onto devices via plastic discs has quickly become archaic. Instead, powerful digital applications are accessed via online servers as a subscription service.
It vastly reduces IT costs and allows businesses to benefit from the kind of technology that, until recently, was prohibitively expensive for all but the biggest organisations. These cloud-based applications are allowing companies to move to a much more flexible and efficient way of working.
It has given rise to a complex and competitive environment, with purchasers faced with a dizzying range of competing offers, deals and pricing structures.
Finding the right deal for your company is no longer a simple matter of comparing upfront costs, there are a range of factors to be weighed up and risks to be avoided. So getting the best from SaaS requires a solid understanding of this emerging market.
A key area to be familiar with is the pressure that some SaaS providers are under to create a customer base large enough to make their business sustainable. The risk is that this promotes a “win at all costs” approach, with short-term profits a secondary consideration to long term gains.
While profit margins may not currently be sustainable, the business mindset adopted by some SaaS providers is that these financial risks are justified by the potential long-term yields – relying on the so-called “J-curve” effect. The problem is, many organisations will never make it to this point of sustainability.
It’s this kind of pressure which creates a dangerous loop as a SaaS provider will make increasingly desperate attempts to attract a customer base – prices will plummet and “too good to be true” introductory offers made.
Extra costs are likely to be tucked away in the small print with introductory offers aimed at hooking in customers before costs are gradually ramped up over time. Often initial “deals” will be based on a certain usage levels, with additional costs kicking in as soon as these are breached.
Another vital area to be consider when choosing a SaaS provider is the quality of customer care offered. The bottom line is that if you’re paying a bargain price, you can expect to receive only the most rudimental levels of support.
The low cost has to be weighed against the daily disruptions caused by slow and ineffectual responses to any day-to-day problems. A good SaaS set-up will provide the peace of mind that a dependable support team is ready and waiting to tackle any issue.
And it’s not just support for existing software that matters, it’s finding a company which is constantly updating and improving its software services. Expenses management provider webexpenses is one of the companies which operates a rolling development programme, with constant fixes, updates and refinements.
So while our psychology is wired towards getting a good deal, SaaS is one area which rewards a cautious and considered purchasing approach. With knowledge of the potential pitfalls and some basic research, there are plenty of great SaaS providers out there.
It’s a question of being wary about price drops, always reading the small print and looking for established companies who are able to offer you a simple and easy-to-understand pricing model. Factor in quality of customer support and you should have no problems finding the kind of SaaS provider that can help your business to grow.
Adam Reynolds is the CEO of webexpenses.
Webexpenses provides a smarter way to manage your employee expenses. Find out more here.