What to Know Before Deciding to Invest in a New SAAS Solution

SAAS solutions have gained a lot of attention over the last few years. According to a study by Pacific Crest Securities and For Entrepreneurs, the median revenue growth rate for SAAS companies was 44% in 2016.

However, some experts speculate that the growth may be largely due to hype. Many companies offer services that seem interesting at face value, but fail to deliver valuable solutions to their customers.

You need to think carefully before selecting any SAAS solution. Here are some thoughts you must keep in mind.

Do I need this solution at this stage of my business?

Some SAAS solutions are perfect for enterprise companies. For example, QuantCast and SimilarWeb offer exceptional support for companies with scalable digital marketing strategies. However, those same solutions may be unnecessary for newer businesses operating with smaller budgets.

On the other hand, some SAAS solutions were designed with newer businesses in mind. For example, electricians may want to invest in a software to make sure their time is used most efficiently, because minimizing time on project planning enables them to increase their average hourly earnings by spending more time on billable work.

Does this solution actually address a problem I face?

In 2012, several colleagues of mine in Northern California were working on a new SAAS business solution. Unfortunately, they discovered that most customers felt it didn’t satisfy any real problems they faced.

Many SAAS solutions are equally useless, but they are packaged and marketed more effectively. Customers may spend $500, $1,000 or more for a service that doesn’t address any of their needs.

Before investing in any SAAS solutions, you must:

  • Identify the actual problem. What real-world problems are you facing that can’t easily be solved without an expensive SAAS?
  • Conduct a cost-benefit analysis. Many SAAS subscriptions cost over $100 a month. Is the problem significant enough to warrant such an investment? Some problems are simply too minor to justify such expenditures.
  • See if the solution fully addresses the problem. Some problems are very complex and won’t be solved by subscribing to a SAAS solution. You don’t want to make such an investment until you’re certain the solution offers what you need.

Doing an internal assessment of your brand’s challenges is key to answering these points.

Does the solution actually live up to the brand’s claims?

You should never invest in any SAAS solution without vetting the company first. Chris Schrader, Business Intelligence Consultant for Slalom, states that many companies make bold promises that don’t stand up under scrutiny.

“I personally see a lot of value in the SAAS space for a lot of companies for a variety of software,” Schrader stated in a recent Quora post. “I will say in the analytics space, its very saturated with a lot of vendors who are all desperately trying to gain market share.  I think one of the biggest problems with the "big data revolution" is that many seem to think big data is something you do, not something you have.  I think this fundamental way of thinking is what has lead to so much hype and misinformation in the market today.”

So how do you vet a company that offers SAAS solutions? You can start by looking at independent review sites, such as CNet.com. You don’t want to rely on testimonials from their own customers, because these reviewers may be people that tested a free version of the solution and felt compelled to offer a positive testimony as a favor. They may even be completely fake.

Check the Service Level Agreement

You must know exactly what you are getting before choosing any SAAS solution. You need to research the billing policies and know what guarantees are set in place.

Keep in mind that performance guarantees may depend on the subscription you purchase. You don’t want to assume that you can purchase a lower-tier plan and receive the benefits available to higher paying customers.

Choose Your SAAS Solutions Carefully

SAAS solutions can be invaluable to businesses, but they can also be money pits. You need to do your due diligence before investing in them.

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Sunday, 22 October 2017
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