Challenging SaaS - Part 1

In my efforts to sell SaaS I have been presented with a number of “anti-SaaS” arguments. Some of them are just irritating but some of them require a professional and comprehensive response.
In this post I will try and enumerate these arguments and also provide a convincing response. You see, I believe that adopting SaaS is also an issue of people (customers) training. They still do not understand the benefits of SaaS but they clearly see its drawbacks, from the first minute of discussion. A few days ago, an accounting professional responded to me like this: My personal mentality drives me to always own what I am using. That’s why I don’t embrace the idea of SaaS. This person clearly understood the economic benefits of SaaS, but he still resists to adopting it.

  • Where is my data? People tend to think of data as something “sacred” – and it probably is. Enterprise data is the enterprise’s asset. They have worked long and hard to create this clientele (i.e. customer file) and those economic figures (i.e. accounting database) and they are not prepared to just deliver this to a third party. Of course, the SaaS provider must provide SLA’s and confidentiality terms and conditions, maybe even penal clauses in case of data leakage. But what the average customer thinks is “if my data leaks out, who cares about penal clauses etc. I will have LOST my data”. Which is correct, no doubt about that. At this point the SaaS provider must demonstrate seriousness in their SaaS offering and start building up their reputation from day one. The probable “problem” will always be there, but the customer must also recognize that they don’t need their servers to be placed outside their physical four walls. Data leakage can also happen from within the organization. Bottom line is this: SaaS presents fewer dangers in data leakage simply because the SaaS vendor has much more to lose in case of misusing the data, compared to the average employee that can just resign on a Monday morning.

  • SaaS is too expensive. Usually, when the vendor presents his pricing model, the customer makes some quick multiplications like this:
    [users] x [months] x [monthly fee] = [WOW! WHAT THE HECK IS THIS?]

    All SaaS vendors know that this is not correct. It is not just about one simple multiplication. One must put down all related numbers and see the Total Cost of Ownership. Also, take into account the initial investment on licenses and hardware that SaaS does NOT require. And finally, the HR cost (personnel etc.).
    One way to go about this problem is that the SaaS vendor, in the pre-sales stage makes a thorough presentation of such matters. In this presentation, the Financial Director of the customer must also be present. The trick is to drive customer’s brain away from the “simple multiplication” mode.

  • SaaS is too cheap to be true. In some cases, the above multiplication produces really low numbers! (for example, in cases of low-end applications or limited-scope technical tools) Then customers tend to believe that there is a secret “catch” in the deal (“Oh dear, it can’t be that cheap!”). Instead, they should simply take into account the fact that the SaaS vendor is doing what they’re doing for a large number of customers and users, so the vendor is using economies of scale to offer such low prices! Additionally, if we are talking about a limited-scope system or tool or software, then this is offered “out-of-the-box” and so the maintenance and customization costs are close to zero. This is not the case with, say, a big ERP.

    That’s all for today, I will come back on this issue, with more “deal-breakers” that potential customers raise on the pre-sales stage.
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