February 15, 2009, 8:57 AM — Choosing the right SaaS vendor has always been important. But, given the existing state of the economy and the continuing financial pressure on SaaS start ups, careful evaluation has become increasingly critical. It is vital to ensure your SaaS vendor is in a solid position to survive the current recession and has the right policies and practices in place to protect your data and deliver the service you rely on.
What to ask your SaaS vendor:
No doubt, you want a solid, well-established company. According to Phil Wainewright, the costs involved in becoming established as an on-demand vendor can be two to three times as high as those incurred by on-premise solution providers. While most SaaS providers are indeed viable, there will always be a few questionable start ups, as well as some “fly by night” vendors who operate on the brink of bankruptcy. You can avoid these by looking for one with a solid financial standing. For example, an established base of current and referenceable clients is an indicator of predictable and consistent cash flow, while backing from venture capital firms and other investors demonstrates that there are sufficient funds available to support operations into the foreseeable future.
If a vendor is trustworthy, they’ll be open and honest about all facets of their operation, including their service availability, past failures, service agreements and security policies. Beware of any provider that hesitates to share this information - if its difficult to locate the Master Service Agreement, ask questions and carefully look into these.
Security and Data Protection
With SaaS, you are relinquishing a certain amount of control over the application, and all related data, to the vendor. So, you’ll need to make sure that the most advanced measures are in place to prevent vital information from being breached or stolen, or lost in the event of a power outage, hardware failure, fire, or other disaster. Server partitioning, firewalls, data encryption, and multiple levels of password protection and user authentication are all techniques your SaaS provider should be employing. Additionally, inquire about the backup policy and Disaster Recovery plan - can the provider easily restore your information if needed?
Service Level Agreements (SLAs)
Make sure you fully understand the vendor’s service guarantees before you commit. Additionally, do some research into their past performance history. It can uncover any major or recurring issues, and save you the hassle of similar problems down the road. Additionally, ask the provider about its policies regarding SLA breaches, for example, how it notifies its customers when guarantees have not been met.
The last S in "SaaS" - SaaS is about support and service and making it easy for you to find answers to your issues. What happens if you experience technical difficulties, or have a question about how to use a certain feature? Can you find the solution yourself through a self service system, or will you have to rely on the vendor to get back to you? will it take three days to get a response? Review the vendor’s customer service practices in advance and put them to test if the vendor provides a trial period. This will help ensure that the provider you choose is dedicated to providing top-notch service, and will meet your expectations when it comes to supporting you and your users.
Last of all, you’ll need to define your exit strategy before signing on the dotted line. Whether you cancel your contract mid-term, or opt not to renew once it expires, there are a few factors that need to be considered. Will penalties and fees be incurred? What happens to your data? Will they support your migration strategy? And, most importantly, what happens if they are acquired or go out of business? make sure you understand how to get off the SaaS bandwagon if you need to.