Avoiding SaaS Pricing Pitfalls: A Strategic Guide

You score an awesome bargain with a SaaS platform provider. It's a real money-saver for your company, and you're all set to wow the senior leadership team.

Fast forward three years down the road, that same SaaS provider slaps you with a price hike, more than double what you initially signed up for. Now, you're itching to explore another SaaS platform, but you're a bit anxious about the possible turbulence it could bring to your business.

Sound like déjà vu?

In the current business landscape, there is a widespread adoption of Software as a Service (SaaS) platforms. These platforms offer a plethora of advantages, including significant cost reductions, unparalleled flexibility, robust security measures, effortless scalability, and the integration of advanced AI-powered features. It is evident that they have become an essential component in the fast-paced world of digital business.

Today, I'm going to talk about how we can avoid some of the potential cost pitfalls.

The lure and trap of SaaS platforms

SaaS platforms are definitely attractive at first glance: they offer competitive prices, especially for long-term contracts. It's hard for a business executive or decision-maker to say no to such a SaaS platform.?

As the long-term contract nears its end, things start to look bleak. The renewal price is going up way more than we expected, so our old budget is out the window. This is going to create some serious financial problems.

Does that mean businesses should avoid SaaS platforms? Of course not!

In other words, businesses need to be aware of this potential problem and take steps to prepare for the upcoming price hike. A well-thought-out renewal plan is essential.

Cloud-based SaaS platforms are always evolving. When your contract is up for renewal, you might not be able to get the same old SKUs. Instead, you might be offered new ones with features you don't need or plan to use anytime soon. This tough situation calls for a smart solution.

Agility is the key

The solution to this problem lies in Agility.

How agile is your business to dump your current SaaS platform and move on to another SaaS platform?

There are two factors that determine the agility of your business

1. Long term vision of your business data
2. 'Anchor footprint' of your current SaaS platform

Long term vision of your business data

A SaaS platform is a data management tool, plain and simple. Think of it like a cargo ship: your data is the cargo, and the SaaS platform is the cargo ship. The cargo ship is there to carry your data safely and efficiently to its destination. You should be able to move your cargo from one cargo ship to another without any issues.?

Things can get more complicated with data when it comes to SaaS platform. But to ensure that you can move your data from one SaaS platform to another here are some suggestions:

1. Agree upon the format that data will be made available to you if you were to leave the current SaaS provider and move to another.
2. Make these terms of data backup and format a part of the contract.
3. Also include a clause in the contract that the current provider will provide sample backup data for an agreed upon period (could be a months worth data) once every quarter.
4. Once every quarter add a sprint backlog item to verify the sample data backup and another sprint backlog item to verify the Anchor Foot-print explained below.

Anchor footprint of your current platform

In the world of business, it's all about seamless integration. Every system in your organization needs to be able to talk to each other. There are a few ways to do this:

• Integration Platform as a Service (iPaaS) like MuleSoft, Dell Boomi, Microsoft Azure Logic Apps, and Informatica Cloud
• Integration using APIs provided by the SaaS providers.
• Integration using scripting tools like PowerShell to manipulate data in various systems.?
• Robotic Process Automation (RPA) based integration solutions

Whichever way you go, seamless integration is key to running a smooth and efficient business.

Anchor footprint tells you how deeply your business is anchored in the current SaaS platform. The larger your anchor footprint the more effort it will take to move your business to another SaaS platform.

The anchor foot-print is decided by the following factors:

1. Number of customizations carried out within the SaaS platform.
2. Number of integrations between the current SaaS platform and other systems.?
3. Complexity of the integrations.?
4. Number of customized integrations.

The risks arising from anchor footprint could be mitigated by documenting the current SaaS platform integrations and verifying them as a sprint backlog item every quarter.

In general the more OOB (Out-of-the-box) features that you adopt from the SaaS platform the smaller will your anchor footprint be.

A smaller anchor footprint ensures an easy transition to another SaaS provider.

To summarize adopt the following strategies to make your business more agile:

• Minimize customization of the SaaS platform; prioritize leveraging out-of-the-box (OOB) features.
• Cautiously avoid customized integrations, particularly those reliant on scripting like PowerShell scripting. This strategy diminishes the anchor footprint rendering transitions more feasible.
• Maintain documentation of each platform's anchor footprint. This invaluable resource streamlines the evaluation process when the need to shift to a new platform arises.
• Allocate time for regular verification of SaaS platform-provided backups, incorporating 2 quarterly sprints for this purpose. Ensure that these backups fulfill the requisite criteria for facilitating a platform transition.
• Stay apprised of other competitive SaaS platforms available in the market and their unique offerings.
• Ask for a renewal offering at least two quarters before the expiration of the current contract. So you will have enough time to transition to a new SaaS platform if needed.

By adhering to these strategic principles, businesses can harness the power of SaaS platforms while mitigating the associated financial risks and ensuring a smooth transition to another SaaS platform when necessary.