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• Three Realities for sourcing SaaS cloud solutions

Three Realities for sourcing SaaS cloud solutions

In one of my recent assignments I came across interesting myths and realities about SaaS solutions. Over the last years SaaS solutions and the related Cloud Services have been considered as pivotal in Digital Transformation. As an IT strategy consultant I really wondered what is different now from the existing solutions that are used by the organisation that need to ‘transform digitally’. With high expectations I started the project and found some interesting realities. To name a few:

'SaaS is a solution that should be used as designed and the customer needs to adapt its processes and functional requirements.'  

Yes, the SaaS solution provides a valuable stepping stone for core functionalities. But the devil in the details. Configuring a SaaS solution has it’s limits; real distinctive functionality might be provided by other SaaS solutions or ecosystems. Fine, but that will add a complexity which must be taken into account in the evaluation and the business case. 

'With a SaaS solution, industry best practices are instantly available'

This sounds great, but the best practices of the industry might not be a best practice for this particular customer. Some SaaS solutions, especially the ones that originate from a history of technical proficiency provide an excellent suite with which best practices can be created. But the reality is that the customer needs to design their best practices themselves.

'SaaS cloud contracts are fixed and cannot be negotiated'

The core contractual design is a standard agreement with fixed terms and conditions for all SaaS customers. In essence, this is fundamental for the SaaS provider. It will not be possible to have special T&C’s for the many thousands of individual customers. A customer will have to accept that. In fact, the standard T&C’s including service levels are usually well optimized for the service. However, next to the standard T&C’s additional clauses can be negotiated to best fit the customer’s situation.

The actual requirements from GDPR come into play. The contract, T&C’s and Processor Agreement do need to cover the responsibilities of the processor as well as the sub processor. The reality is that both customer and supplier(s) need to build their knowledge of GDPR and develop their appropriate measures and agreements. This still is a relatively new area where parties are in the process of defining the solution.

How about new rules for sourcing ?

A real distinctive sourcing process

Selecting a SaaS solution requires a double effort from the customer’s side. It is not only about the characteristics and features of the solution together with the related ecosystem. But next to that, the related changes and innovations to the processes of the customer must be taken in the evaluation.

It is imperative for the customer to: 1. really understand their own challenges, 2. how the offerings in the broadest sense (including the technical integration challenges, ecosystems and value of the transformed processes) meet these challenges. 3. determine the integral value of the full offerings of the various suppliers.

And for the suppliers; how did the selected supplier made the difference ?

The supplier that showed deep understanding of the customer and clearly demonstrated how they will meet customer’s challenges made the difference. In the dialogue the supplier took design decisions based on their expertise. They were able to explain why they made the particular recommendation and immediately showed how it was configured in the SaaS solution. Next, they explained the impact on the processes and organization of the customer.

So, my take away was that sourcing a SaaS solution is in essence sourcing your own part of the digital transformation and leverage the supplier’s technology and insights. Not just on paper and on Powerpoint, but in a tangible working solution and a realistic Transformation plan. And that is the new reality.