Avoiding the “Saashole”

Software-as-a-Service (“SaaS”) is a software delivery model where the product and its associated data are hosted in the cloud, and users gain access to the application via a web browser. In recent years, many business applications including accounting, customer relationship management, enterprise resource planning, and human resource management have moved from on-premise licensed installations to SaaS as a primary delivery method. Gartner Group estimates that SaaS revenues will reach a projected $21.3 billion by 2015.

I should say upfront that I am a big fan of SaaS. Its simplified product and service model yields lower retail costs, improved vendor profitability, and makes customer support more convenient for everybody. Unfortunately this sometimes means that all customers have to be shoe-horned into “the box” of canned functionality. A “one size shoe that fits all” solution may work well for some organizations, but it often doesn’t for all. Organizations that have customization needs or unique integration requirements will find that SaaS is too restrictive for them and in turn may end up in the “Saashole” trap. There are often better choices for these organizations such as hosted or an on-premises license.

Here are my tips for avoiding the “Saashole” trap:

Review service level agreements for reasonable up-time guarantees and response time measures for all major application functions. SaaS applications are cloud-based, meaning a shared infrastructure of web servers, applications servers, and database servers that are accessible via the public internet. SaaS does not offer exclusive use to a single organization so performance can be impacted by what other users are doing at any given time.

Does the vendor support the browser and platform that you desire? Now days SaaS is accessed using a web browser. Are you patient enough for browser-only access? Is your intended use conducive to browser access? Is your internet connection stable and fast enough?

Choose a vendor with a more evolved reporting capability that shields end-users from system complexity. SaaS vendors commonly use a large data repository comingling customer data as this is most efficient and affordable for them. This multi-tenant design requires programming to separate customers logically and adds complexity to data reporting. Techniques like de-normalized database views and metadata layers facilitating intuitive data relationship, grouping, and summaries go a long way to enhancing the productivity of reporting. Ultimately the best approach eliminates all reporting complexity by abstracting the data relationships from the end-user. This yields point-and-click report definitions, grouping, and summaries in the most user-friendly format available.

Make sure the vendor’s “box” of capability is big enough for your needs. A single code base is another key tenant of SaaS. A lot of SaaS providers have application policies to customize look and feel, and in some cases, parts of the customer experience, so that doesn’t necessarily mean that every customer is stuck with the exact same user experience. But it what it does mean is that code customization for the unique needs of a single customer is not supported. Keep in mind that mature products tend to have a bigger “box” of capability that allows more organizations to be easily supported by the product.

Don’t get “Saasholed” into a long-term contract without cancellation options. Yes it is true thatSaaS has a subscription pricing model, but many vendors impose minimum contract terms or early termination penalties. It’s no fun to be pigeon-holed with a contract for a product that is not working well for you. And what if your organization requires change? You must consider your future needs as well.

Don’t overlook your system integration points, data imports, and data exports. In our business of HR, Benefits, and Payroll, getting data in and out of the system in a secure and efficient manner is an essential requirement for our clientele. Employee loads, time imports, carrier feeds, G/L files, and published web service integration points are just a few examples. Does the SaaS solution you are considering meet your integration requirements?

The key to every successful SaaS implementation is matching customer requirements to the capability of the solution. Before making a buying decision, conduct enough due diligence to know if the solution is a good fit for your unique requirements. Like with so many things in life, the proof of the pudding is in the eating. One sure way of avoiding the “Saashole” trap is to try the service before signing a long-term contract.

Why I want Zebras for customers, and not just because…

Zebras are majestic, unique, and beautiful.

The software-as-a-service industry caters products and services to the bell curve of customer requirements—our industry calls this vanilla service model of product and service capabilities “the box.” Little emphasis or focus is placed on handling the out-of-the-box situations or unique customer service requirements because a limited service model is much easier to develop, implement, and support. A simplified product and service model with an assembly-line support infrastructure yields improved profitability and lower costs, right? This of course means that all customers have to be shoe-horned into “the box.” This “one size shoe that fits all” mentality may work for some organizations, but it doesn’t work for all because this is often the reason organizations contact my company—PeopleGuru. At PeopleGuru, we’ve affectionately nicknamed these unique organizations “Zebras.”

A Zebra’s stripes are as unique as fingerprints, and no two are exactly alike.

So what makes an organization a Zebra? We define a Zebra as a client that requires more flexibility in their benefit administration, payroll, time and labor, and/or HR product and service model. Often these organizations have unique policies or procedures that are of cultural significance and provide a unique competitive advantage—policies and procedures that these organizations firmly believe are worth preserving. Zebras are often forced to resort to labor intensive manual administration of their unique needs outside of their core systems. Organizations like a 1,000 employee health insurer with a generous but unique 401K company match eligibility requirement that is subject to an annual look-back of earnings and hours paid. This same organization has a paid time off accrual policy with more complexity than is the industry norm and an online benefit enrollment process with tons of employee choice. Or a beach resort that employs 900 who when facing a serious compliance dilemma and substantial wage and hour fine, engaged PeopleGuru to preserve their long standing practice of assigning wait staff to both the banquet and the restaurant during the same shift. Another is a 750 employee home improvement contractor that records hours and jobs in the field and feeds this data real-time to an in-house system.

All Zebras have two things in common; they choose to be Zebras, and they take great offense to being treated like they aren’t.

Zebras have excellent senses; they can even see at night and in color.

It’s my opinion that our Zebras are more industry savvy and competitive. They don’t swim upstream or create policies to be difficult. They see opportunity where others miss it, and they operate their business with a unique competitive advantage because of it. Yes, it is true that Zebras really take advantage of PeopleGuru’s unique product and service capabilities, and we love each other because of it. And we are always welcoming new Zebra clients.

Of course, you don’t have to be a Zebra to be a PeopleGuru customer, since we literally serve thousands of organizations that aren’t. Then again, you may find peace of mind knowing you can show your Zebra stripes in the future if you ever need to.