Top 4 mistakes to avoid when purchasing SaaS apps

Poor software purchasing decisions can be costly, causing loss of productivity and failure to meet key business objectives. Here’s how to steer clear of the most common blunders companies make when choosing SaaS applications.

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There are thousands of software-as-a-service (SaaS) apps on the market, all competing to be number one in a particular category. Consequently, organizations often have a difficult time selecting the right SaaS apps for their specific needs — and they make mistakes that can cost them time and money.

Here are the top four missteps companies make when buying SaaS apps, and how to circumvent them:

1. Not considering the 'why'

One of the first things an organization should do is ask why it's considering a particular SaaS app, said Steve Cabello, managing director at consulting firm Protiviti.

"My first two questions for clients are: 'Why are you doing this?' and 'What are the strategic drivers?' It's important to know that, because then the way you approach the evaluation might be different," he said. "Sometimes it might be cost savings, and sometimes it might be to gain operational efficiencies."

IDC analyst Frank Della Rosa agreed, saying companies need to determine their operational as well as their aspirational drivers. Operational drivers are tactical. For example, something is not functioning properly, it's having a negative material impact on the business, and it needs to be fixed immediately. Maybe the data is siloed throughout the organization and the company can't extract value from it — that's an operational driver, Della Rosa said.

Aspirational drivers are mostly associated with digital transformation, he said. "Where do we want to be in 18 months to 24 months? And maybe we have some ideas on new business models, new sources of revenue, and we really want to change the way the industry perceives value," Della Rosa said. "A good way to think about aspiration is sort of a reimagining of the value proposition for customers."

Too often, organizations make these decisions in haste, and they're usually driven by operational issues. However, companies also need to take the time to consider the bigger and broader aspirational drivers, which can open new possibilities for greater efficiency as well as greater customer and user experiences, he said.

2. Inadequate understanding of the critical requirements

Rather than look at a laundry list of features during the selection phase, it's important to really understand the critical needs of the business, said Christina Kearney, chief marketing officer, SoftwareReviews, a provider of software reviews to help organizations make better buying decisions.

First, leaders should have a process they follow for software selection; they shouldn't just be making this up as they go along, she said. A poor software purchase decision can be costly, resulting in a loss of productivity and failure to meet key business objectives, not to mention the high costs of switching if the company needs to start all over again.

"So the selection process should be a templated, documented approach that can be shared with stakeholders," she said. "What's most important is that everyone is aligned on a singular process and way of going about the evaluation."

Cabello agreed that companies should focus on the select few business requirements that truly drive value and/or are unique to the business.

"If you give the vendor 100 or 1,000 requirements, the vendor will pick and choose which ones are most important to them, where they'll shine," he said. "So you should focus on no more than 25 things that are really going to make a difference in your business."

3. Not performing due diligence

Leaders should ensure that the applications they are evaluating and selecting truly align with what the business needs now and in the future. An organization's needs are going to change, and feature sets in the market will also change, Kearney said.

"However, the organization itself will likely not change software providers very often," she said. "So it's really important to understand how a provider is unique, how they service their customers, and also what it's like to work with them after the contract is signed."

That means companies should diversify the inputs that are guiding their decisions, and they should also use buyer reviews, testimonials, references, and other secondary research as part of their evaluation processes.

Buyer reviews help leaders understand not only what customers think about the features and capabilities of products they’ve purchased, but also what they think about their relationships with their providers, Kearney said.

"So what's it like to work with that particular software provider? How were they during negotiations and the contracting phase? What was it like to work with them after the contract was signed? Those are things that can be gleaned from buyer reviews as well as doing an in-depth analysis of the experiences that other customers have had," she said.

4. Failing to include users early in the process

User adoption is critical when it comes to implementing new SaaS software. However, a key mistake that a lot of organizations make is not including users early in the purchasing process. That will result in user dissatisfaction and non-adoption, Kearney said.

"These are all things we want to avoid," she said. "So bringing in a small but focused team of people who can represent all of the functions that are going to be using that software is very important at the very beginning."

Della Rosa said that as businesses become more aware of the new possibilities of implementing SaaS applications, they have to place a greater emphasis on people in the decision making process.

"The mistake is thinking that you can replace a legacy application with a SaaS application and not have it have implications for the jobs that need to be done," Della Rosa said. "So taking a step back and working with HR [to determine] how this could potentially change job roles within the company" is a key part of the process.

Businesses that do not pay enough attention to the users during the SaaS buying decision end up with huge problems, he said. "Users will be slow to adopt a new application, or they won't be fully extracting the potential value from the application."

By avoiding these mistakes, organizations can be sure they select the SaaS software that best meets their needs and enables the business to operate more efficiently.

Copyright © 2022 IDG Communications, Inc.

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