With advent of digital economy, Saas based solutions have become order of the day. While it gives ease of procurement and clear view of ROI with pricing closely tied to the business outcome, having implementation contract with Outsourcing vendor can be tricky.

Let us take a step back and understand what ‘SaaS’ really mean.

SaaS  product vendor leases IP associated with product based on per transaction or user or other unit-based business KPIs. While client owns the data, he does not own IP for the associated product. Product is typically hosted on cloud, so it can be accessible in multitude of platforms.

Role of outsourcing vendor is to enable SaaS product across geographies or business units. Typically, SaaS vendor is expected to cover majority of configuration as well as enhancements, outsourcing vendor can help with integration or minor configurations especially during further roll-outs.

Here are the key considerations during outsourcing process.

  1. Get absolute clarity in outsourcing  and SaaS product vendor relationship. It would help to outline responsibility matrix  with roles expected to cover by SaaS vendor and outsourcing provider.
  2. SaaS products come mostly with pre-defined configurations and offer limited scope in extensive customizations. That would put lot of strain in downstream systems to accommodate such changes. That would mean that integration effort would be higher than expected. Integrating your on-premise systems to cloud based ones would mean additional effort than integrating with another on-premise system.
  3. Plan for additional infrastructure effort if your outsourcing vendor is using offshore delivery centres. Connecting to SaaS product vendor’s development or test systems often results in higher effort than connecting to your on-premise systems.
  4. By definition , SaaS offers easy entry and exit criteria, in reality it would be far more complicated than expected. Moving from one SaaS vendor to another would be very costly affair. It would be important to define (atleast ascertain) that there would be easy way out if things head south. Its also important to cover that in your outsourcing contract as well if you have client data protection policies.
  5. Do not ignore change management effort, though SaaS products have made considerable advancements in UX thus in adoptability. It would still mean new way of working for users, thus effort for change management during transition is absolutely essential.

Overall, while ‘brave new world’ has opened new and efficient ways to conduct business, basic principles to outsourcing does not really change. Which is ‘ clearly Identify risks’ and protect yourself.

More on SaaS journey later.