To make sure that you carefully approach the selection of the right SAAS application using a plan and criteria that will lead you down the best path for your organization and company each one of the five tips could be used as part of an overall evaluation framework.

  1. While you as a user organization may not have the expertise or the bandwidth to maintain the technology infrastructure which supports your SAAS applications, you still need to ensure that the infrastructure performance meets your requirement at all times. For this, you should ask your SAAS providers to provide SLAs regarding both the SAAS (business) applications and the underlying SAAS infrastructure.
  2. While you are shifting your capital expenses on to the vendor and have agreed to use the software by paying for operational expenses, someone (the vendor) has to maintain the cloud infrastructure. So, a part of your cost would go to cover the vendor’s CAPEX, which is acceptable. However, you should have done your homework regarding how much you would have had to spend annually, had you actually owned and maintained the cloud infrastructure. The logic here is that the service provider can have a shared infrastructure on which he can provide services to multiple clients, thus getting the infra costs shared among the users.
  3. Since you can start with cloud based services without upfront capital expenses and can terminate the contract at any point of time, there may be a tendency to not perform your due-diligence before starting the cloud based subscription. However, you must not surrender to this temptation because the reason why you subscribed to cloud computing service was that you wanted to alleviate a certain pain through this service. Any failure in this front may mean:
    • Reluctance of top management to fund initiatives in this direction in future
    • Loss of opportunity to tap the business benefits of the subscribed service, during the time the unsuccessful project was on. This may allow competitors to catch up and move ahead.
  4. For services where you do not have many vendors offering the same / similar services, subscribing to SAAS may result in lock in to the entrenched service provider, who has more bargaining power and can thus dictate the terms of the commercial negotiations. However in this situation, it may be a good idea to start with a new service with low initial costs, and if the business benefits justify, then go for a full ownership, license based model. This way, you have already tested the claims of the vendor, regarding the business benefits you can derive from this solution.
  5. One of the benefits of having control over your IT infrastructure and applications is that if there are improvements made by the organization, the benefits will be reaped by you, naturally. But if you outsource the maintenance and upgrade of technology infrastructure, the benefits accruing out of any improvements in work or upgrades in technology may be not visible to you and the service provider may not pass on the benefit to you.

So, it is always advisable to have SLAs defined in a way that the benefits arising out initiatives by either side should be shared among the end-client and the service provider.