Welcome!

Recurring Revenue Authors: Yeshim Deniz, Liz McMillan, Elizabeth White, Xenia von Wedel, Carmen Gonzalez

Related Topics: @CloudExpo, Microservices Expo, @DXWorldExpo

@CloudExpo: Blog Post

SaaS Adoption: Before You Sign on the Dotted Line | @CloudExpo #API #SaaS #Cloud

The attraction of SaaS offerings for businesses include advantages such as speed of delivery, scalability, and low cost of entry

The purpose of this article is draw attention to key SaaS services that are commonly overlooked during contact signing that are essential to ensuring they meet the expectations and requirements of the organization and provide guidance and recommendations for process and controls necessary for achieving quality SaaS contractual agreements.

Introduction
The attraction of Software as a Service (SaaS) offerings for businesses include advantages such as speed of delivery, scalability, low cost of entry, accessibility, and lower costs to just name a few. But one can't deny another aspect of SaaS adoption which is the "selling" aspect of such solutions. SaaS providers want their customers to feel that not only do they have the best solution, but they have your best interest in mind and will take care of everything for you. They will often pitch their solution services as complete and comprehensive to their customer's needs. But is it necessarily true in all cases? Just like leasing a home or an automobile, it's extremely important to understand the services provided and if those services match the needs and requirements of your business. There are some basic common areas in which key services should be understood and, if needed, be negotiated with the provider to ensure you're provided the best services possible. Don't assume that because other customers agreed to the provider's standard agreement, that it also meets the needs of your business.

Hosting Arrangement and Third Parties
Not all SaaS solutions are developed, integrated, supported and hosted the same. In order to understand and evaluate potential risks, such as the SaaS Provider becoming insolvent and going out of business, it's important to understand the hosting arrangement and identify all parties involved. Here are some things to ask:

  • Is the solution single tenant, multi-tenant, or on its own hardware?
  • Does the SaaS provider host their solution or utilize a third party such as Amazon and Microsoft Azure?
  • Will the solution be implemented or supported by a third party?
  • Are there third-party products or services required for the solution to operate?

Understanding the Data
Data is the critical part of a SaaS solution. Before the contract is signed, the data formats and even the data relationships of the solution should be well understood. This becomes even more essential if the SaaS solution is expecting data imports from legacy or integrated systems. Once understood a data strategy will often need to be in place. But without understanding the work involved in conversion, the budget and resources may not be adequate for the project. As early as the Request for Proposal (RFP) stage, all potential SaaS providers should supply data format and relationship information.

Environments
It's common for a SaaS Provider to only provide a production environment and use of a common sand-box environment. This proves to be insufficient because the customer has no control as to who makes changes to this environment in terms of configuration and data refreshes. In most cases at least two environments (production and non-production) environments are necessary, so there's an opportunity to test out any configuration changes before going into production. Here are some other examples as to the requirement for additional environments:

  • A development environment could be needed to test complex system integrations or custom development.
  • A training environment with the specific company configuration is required.

True System Availability
SaaS providers will give a percentage (such as 99.9%) of guaranteed uptime / system availability and if for a given month that is not met, a credit is due back to the customer. SaaS agreements define uptime / system availability in a variety of ways. The trick is to step back and fully understand all the possible ways the system could be unavailable on a monthly basis. There are usually two main kinds of unavailability that are planned and unplanned. One of the more common unplanned calculations is as follows.

Uptime Calculation:

((Users Minutes - Downtime) / User Minutes) x 100 = Uptime %

In addition to the promised uptime from the SaaS provider there's also a section in the agreement for planned maintenance. The window of the planned maintenance varies greatly depending on the provider and solution. It could be one hour a month or it could be eight hours per week. What's extremely important to point out here is that in most cases the provider will not include planned maintenance in this calculation for the promised uptime. Therefore the true uptime / system availability promised by the provider is much less given that they could use the entire planned maintenance window and not have to provide any service credits. This may or may not be acceptable based on when the solution is expected to be used, but it's important to understand all aspects of when the solution may not be available.

Time Zones for Service Support
It's important to be aware of the time zones indicated in the agreement in terms of Support Center availability. Your organization could be located in the Eastern Standard Time zone while the SaaS provider's support center is located in the Pacific Standard Time zone where there's a three hour difference. This can be an issue when employees come in at 8 am EST on Monday only to find the solution is not working and the provider's support center is not open until 8 am PST.

Security Breaches and Reporting
The SaaS contract should define the procedure in which pProvider informs your organization when a security breach occurs including how your organization should be contacted and the actions to be taken. In addition, there should be language that by request they should provide any penetration testing reports and proof of on-going security certifications standards (ISO27001, SSAE16, etc.).

Incident Resolution
Expectations as to how incidents are handled should be well defined. Here are some areas to consider:

  • Quicker response for critical and high incidents
  • Escalation of high priority incidents. For example if a high priority incident isn't resolved in two days it becomes a critical incident.
  • The specific method of how your organization should be contacted when these incidents occur.
  • How quickly the vendor should communicate the incident and the expectation of when it will be resolved. Failure to do so would lead to a service credit.

Service Level Credits
What good is a system uptime guarantee of 99.9% if there's no defined compensation when service levels are not met?

  • Define what areas of the service need to be measured (performance, availability, incidents, etc.). Note that in order for this to be effective, there must be a non-subjective way to gather information to measure whether service levels are being met.
  • Make sure your credit structures are well defined in terms of when a credit would occur.
  • Make sure that the contract spells out when (quarterly or annually) and how service levels will be applied (credit or cash back).

Service Renewal
Beware of rate hikes! Many SaaS providers will put in high increases once the term is over. Here are some suggestions to help reduce the high expense impact on renewal:

  • Limit the increase in fee to 3% or an industry standard price index.
  • You may also want to look for a longer term contract up-front (five years instead of three, etc.)
  • Make sure you include a clause that even if the product name changes or gets bundled you pay the same fee.

Return of Company Data
Though the focus when adopting a SaaS solution is getting it up and running, it's important to know how you will handle the data once the relationship with the provider comes to an end. Here are the things to keep in mind:

  1. Data Format: Many SaaS providers will tell you that they will give you the data in the format they select or refer to a standard format. Make sure you negotiate the specific format in the agreement or state that you need to agree upon a format.
  2. Data Definitions: Make sure the provider includes the data definitions of the data they give you. What good is a blob of data if you don't understand it and how to parse out the information?
  3. Data Completeness: Make sure the data given back to you includes any custom scripts and APIs. You want all the custom data that is specific to your organization as it will also include business rules.
  4. Data Expiration: Make sure the provider holds the data for enough time so it can be sent back to you.
  5. Data Return Request: Many SaaS providers will return data only upon request, so make sure you have enough time and understand that you have to initiate the request.
  6. Cost: Beware that some providers will charge for the return of your data so make sure that this is negotiated upfront in the agreement.

In addition, be aware that some providers get rid of the data as little as one week after the end of the contract (usually 30 days). Make sure the time-frame meets your expectations.

Recommendations
In addition to the guidance provided, the following recommendations are encouraged:

Hosted Services Requirements Document
Work with your procurement, security, IT architecture, and legal teams to develop a Hosted Services Requirements document outlining service expectations for the SaaS provider. The document should be used as part of the contractual agreement. If the SaaS provider would rather utilize their own agreement, the Hosted Services Requirements document can then be used as a guideline to compare what your organization wants and what the provider is proposing.

The Hosted Services Requirements document will consist of legal, security, and service related items such as (just some examples):

System Availability

System Performance

Incident Management

E-Discovery

Disaster Recovery

Subcontracting

Insurance

Infringement Indemnity

Service Renewal

Data Ownership

Data Storage

Data Retention & Return

Data Protection

Security

Service Level Credits

Reporting

Dispute Resolution

Software Escrow

Advertising

Acceptance Period

Compliance & Laws


Develop Standard SaaS Questions for RFI / RFP
Though not all SaaS solutions are alike, there are still basic questions you will want to know about the solution from a support, implementation, pricing, and hosting arrangement perspective. In order to measure provider risks and evaluate solutions in a common manner, standard questions become very important.

Institute A SaaS Agreement Review Process
SaaS service agreements and contractual documents should be looked at carefully from various points of view. Such as:

  1. Legal - Is there enough protections to minimize risk?
  2. Procurement - Are the pricing terms and renewal rates acceptable?
  3. IT Architecture - Does the solution meet our Enterprise IT standards and strategy?
  4. IT Security - Does the offering provide adequate security protections based on the type of information being used and how it's utilized?
  5. Solution Owner - Does the solution provide the services necessary for the community using this solution?
  6. Accounting- What part of this solution can we capitalize and what is expense?

More Stories By Ed Witkovic

Ed Witkovic is an IT Solutions Architect at Eversource based in Berlin, Connecticut. His 20+ years of diverse expertise includes leading development and integration teams, Manager and Director of IT Key Account Management for Henkel, and now currently focused on Cloud Adoption in regards to IT Processes, Roadmaps, Solution Design, Strategy, and Solution Assessments.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
The best way to leverage your CloudEXPO | DXWorldEXPO presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering CloudEXPO | DXWorldEXPO will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at CloudEXPO. Product announcements during our show provide your company with the most reach through our targeted audienc...
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
JETRO showcased Japan Digital Transformation Pavilion at SYS-CON's 21st International Cloud Expo® at the Santa Clara Convention Center in Santa Clara, CA. The Japan External Trade Organization (JETRO) is a non-profit organization that provides business support services to companies expanding to Japan. With the support of JETRO's dedicated staff, clients can incorporate their business; receive visa, immigration, and HR support; find dedicated office space; identify local government subsidies; get...
"We view the cloud not as a specific technology but as a way of doing business and that way of doing business is transforming the way software, infrastructure and services are being delivered to business," explained Matthew Rosen, CEO and Director at Fusion, in this SYS-CON.tv interview at 18th Cloud Expo (http://www.CloudComputingExpo.com), held June 7-9 at the Javits Center in New York City, NY.
DXWorldEXPO LLC announced today that the upcoming DXWorldEXPO | CloudEXPO New York event will feature 10 companies from Poland to participate at the "Poland Digital Transformation Pavilion" on November 12-13, 2018.
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smart...
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...