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Aug 17 2006

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SaaS checklist

What to look for in a SaaS vendor is Phil Wainewright’s excellent 8-point checklist on what prospective customers should seek from a vendor, with a ‘best in class’ vendor achieving 6-8 out of 8. It’s quite a demanding list and one that would pose some serious challenges for some of the leading UK construction collaboration technology providers:

  • Try before buy. As web-based service providers, it should be very straightforward to give prospects chance to view a demonstration environment – “Any vendor that avoids doing so either has to offer a very good explanation or has something to hide,” says Wainewright.
  • Top-to-bottom configuration. I thought this was a particularly interesting point. In the UK ‘project extranet’ field, BIW, for example, is sometimes described by its competitors as too complicated – a charge usually related to the large amount of configuration available behind the scenes.
  • Service delivery management infrastructure. Yes, it’s all very well have a big server facility primary and secondary systems, back-up procedures, etc, but how do SaaS providers actually manage their infrastructure and – crucially – their relationship with the end-users. Unless the vendor can highlight, say, use of a sophisticated customer relationship management (CRM) application, then they cannot really be serious about the Service element of SaaS, can they?
  • Service level agreement. Does the vendor offer any kind of service guarantees?
  • Status visibility. Does the vendor publishes the status of its servers? Wainewright says this should be a minimum requirement – I wonder if and when any of the UK construction collaboration technology providers will take this step? (Particularly if they are supporting international supply chains, 24/7 service availability becomes increasingly important and any downtime, planned or otherwise, can have an impact on the ability of a team member to meet deadlines, etc – I have previously noted (see 13 February 2006 post) that Asite seemed to be taking its system offline for a few hours each Friday evening, and that has continued sporadically up to and including last week).
  • Business services API. To exchange data with an application or link it into larger processes, some kind of API is vital, and – in the AEC industry at least – this is likely to become more critical, particularly as major industry customers, contractors and consultants look to link their back-office systems with what’s going on in their projects.
  • Paying customers. A strong list of current, satisfied customers provides great reassurance that an SaaS vendor is not about to go bust (only last week, I pointed out how some UK vendors are making regular announcements about new corporate deals, major projects, etc). 
  • Finance. “It can cost two to three times as much to get established as an on-demand vendor compared to a conventional licensed-software vendor. That’s because pay-as-you-go revenues don’t come in big hits, they build up over time. So an on-demand startup needs to be well funded, either by incrementally building up a paying customer base, or by venture capital of some kind.”

This final point is a particular challenge for the leading UK vendors in the AEC extranet field. Some raised substantial amounts of capital back at the turn of the century (BuildOnline raised some $30m, BIW spent much less); Asite has some wealthy shareholders; others have grown more steadily and/or have licensed their software through up-front payments rather than through service subscription revenues. Whatever the case, vendors – if they are serious about SaaS – will need to show prospective customers that they have the necessary financial strength and that key trends (turnover growing, profits increasing – or, more likely, losses decreasing, etc) are in the right direction.

However, getting up-to-date detailed trading figures to compare the different UK vendors is difficult. Several take advantage of their status as small companies; if they meet two of the following criteria: annual turnover of £5.6million or less, balance sheet total of £2.8 million or less, average of 50 of fewer employees, they only need to submit an abbreviated balance sheet to Companies House. I think only Asite, BIW, BuildOnline (UK) and Business Collaborator submit more detailed accounts (I plan to return to this topic at a future date).

Permanent link to this article: http://extranetevolution.com/2006/08/saas_checklist/

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