How do I Choose Between SaaS Vendors?

A software as a service (SaaS) company sells access to a variety of software programs to business and organizations. This method of information technology services delivery has been steadily increasing in popularity because of the decreased need for investment in infrastructure, hardware or dedicated computer support staff. There are four items to consider when trying to choose between SaaS vendors: service level agreement, system functionality, hours of availability and price.

The dollar value and scope of services available from SaaS vendors usually exceed the limits for a standard purchase order. Most companies complete a procurement process, such as a request for proposal (RFP) or request for information (RFI), to assist in the selection process. From an organizational standpoint, these processes force the client to give serious thought to the services required from the SaaS vendor. In a standard RFP process, the customer provides detailed specifications and allows potential suppliers to provide a written response for review and selection.

Regardless of the process used, all SaaS vendors will provide a written service level agreement (SLA) in which the services to be purchased are outlined in great detail. Review the SLA from at least three different companies to gain insight into the options available, the vendor's ability to meet core requirements and the customer service levels. These responses can be quite wordy, but investing the time and effort is the only way to make an informed, factual decision.

During a complex software selection process, it is quite easy to become distracted by all of the possibilities. Make a list of all of the software features that are required, and a separate list of functionality that would be nice but is not essential. Print a separate list for all of the SaaS vendors, and indicate which features are provided in the proposed solution. Ignore all features that are not included in these two lists. This is a great way to make sure the final selection will meet current needs and not just future ones.

The hours of availability is a critical issue when looking at different SaaS vendors. Check the time zone information and make sure that it is provided in writing. Many companies will offer 24-hour access for a fee. Check which time zone the vendor is using to ensure there are no surprises. Remember to consider not only when users will need access to the system but also when it will be necessary for jobs to be performed at atypical hours.

The pricing options from SaaS vendors can be fixed or based on usage. A fixed price contract is for a specific amount of money for the services listed in the SLA. Usage-driven pricing is based on transactional volume, number of registered users or total monetary value of activity. Review this aspect of the contract in detail and complete an internal analysis to determine which method is the most cost effective.