SaaS (Software as a Service) has become the default delivery model for enterprise software. Effective SaaS evaluation requires understanding both functional fit and the unique considerations of cloud-delivered software—security, integration, and long-term vendor relationship.
This guide provides a framework for SaaS evaluation and selection.
Understanding SaaS Acquisition
SaaS vs. Traditional Software
Key differences:
Delivery model: Vendor-hosted, subscription-based.
Upgrade cycle: Vendor-controlled, continuous.
Customization: Configuration vs. modification.
Integration: API-based connections.
Data location: Cloud-hosted data.
SaaS Benefits and Risks
Why organizations choose SaaS:
Benefits: Lower upfront cost, faster implementation, reduced IT burden.
Risks: Data security, vendor dependency, limited customization.
Considerations: Long-term cost, integration complexity, change control.
Evaluation Framework
Functional Assessment
Does it do what you need?
Core capability: Primary functions.
Workflow fit: How work gets done.
User experience: Usability for your users.
Flexibility: Ability to adapt to needs.
Roadmap: Future capabilities planned.
Non-Functional Assessment
Beyond features:
Performance: Speed and capacity.
Reliability: Uptime and availability.
Scalability: Growth capacity.
Accessibility: Access for all users.
Security and Compliance
Protecting your organization:
Security certifications: SOC 2, ISO 27001.
Data protection: Encryption, access controls.
Compliance: Industry-specific requirements.
Privacy: Data handling practices.
Incident response: Breach handling.
Integration Capability
Connecting to your environment:
API availability: What's available.
Integration complexity: How hard to connect.
Pre-built connectors: Existing integrations.
Data portability: Getting your data out.
Evaluation Process
Requirements Definition
Knowing what you need:
Business requirements: What you're trying to accomplish.
Functional requirements: What the system must do.
Non-functional requirements: Performance, security, etc.
Priority weighting: What matters most.
Vendor Research
Finding candidates:
Market research: Who's available.
Analyst input: Expert perspectives.
Peer references: Others' experiences.
Shortlist development: Focused evaluation set.
Evaluation Methods
Assessing options:
Demonstrations: Seeing the product.
Proof of concept: Testing with your scenarios.
Reference calls: Learning from customers.
Security review: Technical security assessment.
Selection Decision
Making the choice:
Scoring and comparison: Systematic evaluation.
Total cost analysis: Full cost picture.
Risk assessment: Understanding risks.
Stakeholder alignment: Getting agreement.
Contract Considerations
SaaS Contract Terms
Key provisions:
Service levels: Uptime and performance commitments.
Data provisions: Ownership, portability, deletion.
Security commitments: Security obligations.
Pricing terms: Cost structure and increases.
Termination rights: How to exit.
Negotiation Priorities
What to push for:
Price protection: Limiting future increases.
Data rights: Clear data ownership and portability.
SLA specifics: Meaningful service levels.
Exit provisions: Reasonable termination terms.
Vendor Management
Ongoing Relationship
Managing the vendor:
Performance monitoring: Tracking service delivery.
Regular reviews: Periodic relationship assessment.
Issue management: Addressing problems.
Contract compliance: Ensuring commitments.
Vendor Risk
Managing dependency:
Business viability: Vendor health monitoring.
Concentration risk: Over-reliance on one vendor.
Exit planning: Readiness to transition.
Backup strategies: Contingency planning.
Key Takeaways
-
Security requires due diligence: Don't assume cloud is secure.
-
Total cost includes more than subscription: Implementation, integration, management.
-
Data portability is essential: Plan for exit from day one.
-
References matter: Learn from actual customers.
-
Contract terms affect long-term value: Negotiate beyond price.
Frequently Asked Questions
How do we evaluate security? Security questionnaires, certification review, technical assessment, penetration test results.
What's reasonable SLA? 99.9% is common. Understand measurement methodology and remedies.
How do we handle vendor lock-in? Data portability terms, integration flexibility, exit planning.
Should we do a proof of concept? Yes for significant purchases. Real testing reveals more than demos.
How long should contracts be? Balance: shorter for flexibility, longer for price protection. Often 2-3 years.
What about bundled vs. best-of-breed? Trade-off between integration simplicity and functional excellence. Evaluate for your context.