Silverpop - Extensive RFP Processes Don’t Make Sense for Most SaaS Purchases
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Extensive RFP Processes Don’t Make Sense for Most SaaS Purchases

by: bgramer (@IBMforMarketing)
26 July 2007

Many companies over the past few years have failed to develop a quicker, more agile decision making process for Software-as-a-Service (SaaS) products, and I believe they are actually hurting their bottom line as a result.  One company I recently worked with spent an estimated $500,000 on consultants and internal evaluation processes to make a $5,000 per month SaaS purchase without a long-term commitment. How much sense does that make?

SaaS companies, such as, have been pitching the benefits of SaaS over traditional, on-premise software for almost 10 years.  Since the late 90s, the SaaS model has matured to a point where there's nearly a competitive SaaS product for every on-premise product.  So the question is, why are companies still using complicated, outdated processes like RFPs to make SaaS selections? 

Think of SaaS as “software-as-a-utility.”  Meaning you only pay for what you need, when you need it.  You don’t have to sign long-term contracts or have huge upfront costs to get started. Sounds a lot like using a utility, doesn't it? You don't buy an electric plant to turn on the lights. 

Thought of in that light, you can see that there is no value in engaging in a complicated, long selection process when making a decision, and in fact, a complicated process can actually lead to a negative return-on-investment, or at minimum, a longer than necessary duration of time before ROI is realized.  Generally, you decide based on need, service and price if a utility can solve a need/want you have, and then you purchase.  If for some reason the utility doesn't meet your expectations, you cancel and try a new one. 

For example, suppose cable isn't meeting all of your viewing needs because you're a huge football fan and you want more access to multiple games.  So you switch to a satellite service because it has the NFL package, allowing you to spend Sunday afternoons watching multiple games at one time. The decision took very little time because the cost of turning off one utility and changing to another is relatively low.  (Okay, and in this situation, the wife was away for the weekend.) All the responsibility is on the utility to satisfy you.  So the cable company is continually trying to enhance their offerings, and so is satellite TV. 

SaaS solutions are similar and should be approached in a similar manner. Purchase access; try it; keep using it if you like it.  Purchase access; try it; find something new if you don’t.   The best way to see if a product can really solve your business need is to run it through the paces a bit, and SaaS allows you to do just that.

With SaaS, you don't need expensive hardware, software, or people to utilize it.  You may want IT to weigh in on strategy and maybe help with integrations.  But if the SaaS vendor is following a good model, it shouldn't be hard to make a decision. If a SaaS vendor can check all your high-level functionality requirement boxes; they have the proper security documentation, privacy statements and service level agreements; they have client references; they are financially stable; are priced right and present a compelling ROI case, what else do you need to make a decision?  Do you really need to go through a long, complicated process like an RFP?

Remember, you can turn a SaaS product off as easily as a utility if it isn't responsive to your needs.   




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