I recently wrote in “So What if my Vendor isn’t a True SaaS Provider?” about the real reason that having a vendor that follows a true SaaS business model was important. Specifically, if they aren’t true SaaS they may have a business model focused on business failure. Their failure can cause you significant business disruption.
Well, recently Ann Grackin and Bill McBeath of ChainLink Research have written a two part series that touches on this subject in very supportive ways. In their first post, “SaaS Pricing: Part One – Insanity or Good Deal for Users?” they focus on the different pricing concepts and the technical value aspects that SaaS solutions incorporate. These are key concepts and you should look at what they have written.
Their second post “SaaS Pricing: Part Two – Insanity or Good Deal for Users” gets to the “viability” aspects of the business model. Specifically, the interesting part of the SaaS business model for enterprises is the transfer of risk from the enterprise to the vendor. This can be good for both enterprise and vendor, but only if the vendor manages it correctly. As Ann and Bill say, “… too much risk on the part of the technology provider is a ‘going out of business strategy.”
Their focus in these posts is more on the pricing and cost benefit concerns for doing a SaaS deal. My article was focused on the financial viability of the vendor. Both of these topics are only a portion of what you need to consider when selecting a vendor. As I stated before, when choosing a solution provider, financial viability is a key factor to consider along with functionality, cost (and the pricing model), technology (will their platform allow viability from their pricing), vision, and service and support. We will be writing more about the solution selection criteria we feel are important in future posts.