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How to buy SaaS Applications

This week I was delighted to join MR Rangaswami, CEO of Sandhill Group, David Knight, SVP at WebEx, and Ken Rudin, CEO of LucidEra for a spirited discussion on how Software as a Service is transforming the software buying cycle. The webcast featured Doug Harr, the CIO of Ingres, sharing the CIO’s perspective on Software as a Service and his best practices for purchasing and deploying SaaS systems. You can view the recorded event here.

We had a a lively and informative debate, with nearly 400 registrants and lots of questions and answers.

The central question was how the buying process for SaaS applications is different than that for traditional enterprise software, and what things should buyers be sure to look out for as they procure and deploy SaaS applications. Doug did a great job of giving advice from the CIO perspective on what he has learned from deploying SaaS and open source systems at Ingres and in prior lives.

The conclusion at least in my mind was that SaaS shifts the buying power from the vendor to the buyer vs. the old software days.

Why? With SaaS you know exactly what you are getting into in advance - because you can demo, trial, read on-line reviews and engage in a community with other users before you buy. And what you end up using is exactly the same as what everyone else uses - so there can be no smoke and mirrors or vaporware as long as you do your homework. And since you aren't stuck with owning the software and making a huge capital investment that you might be fired if you abandon, you can leave any time you like if you don't feel like you are getting your money's worth. Which is why it is particularly important to make sure you know what will happen if you ever decide to leave.

In the old on-premises days
, your only way to learn about software applications was from a sales representative or going to a trade show - there was no way to do your own on-line research. Plus there didn't use to be community forums where you could ask questions of other users, or places like the AppExchange where you can read reviews from other businesses like yours. At best you might be able to talk to a couple of references that were hand-picked by the vendor.

In the old days, a demo was almost never representative of what you would see in real life, and you could certainly never trial applications like Oracle and SAP. And once you bought the software you owned it - so it was your problem to make it work.

So my conclusion is that what is different about the SaaS buying cycle is really nearly everything - if you change your buying process to take advantage of all of the resources now available.

My favorite "slam dunk" question was from someone in the audience who asked me why NetSuite refuses to offer monthly or quarterly contracts. You'll have to listen to the event to hear my answer, but in related news today it seems that the latest research from Piper Jaffray uncovered low customer satisfaction with NetSuite.

This week I was delighted to join MR Rangaswami, CEO of Sandhill Group, David Knight, SVP at WebEx, and Ken Rudin, CEO of LucidEra for a spirited discussion on how Software as a Service is transforming the software buying cycle. The webcast featured Doug Harr, the CIO of Ingres, sharing the CIO’s perspective on Software as a Service and his best practices for purchasing and deploying SaaS systems. You can view the recorded event here.

We had a a lively and informative debate, with nearly 400 registrants and lots of questions and answers.

The central question was how the buying process for SaaS applications is different than that for traditional enterprise software, and what things should buyers be sure to look out for as they procure and deploy SaaS applications. Doug did a great job of giving advice from the CIO perspective on what he has learned from deploying SaaS and open source systems at Ingres and in prior lives.

The conclusion at least in my mind was that SaaS shifts the buying power from the vendor to the buyer vs. the old software days.

Why? With SaaS you know exactly what you are getting into in advance - because you can demo, trial, read on-line reviews and engage in a community with other users before you buy. And what you end up using is exactly the same as what everyone else uses - so there can be no smoke and mirrors or vaporware as long as you do your homework. And since you aren't stuck with owning the software and making a huge capital investment that you might be fired if you abandon, you can leave any time you like if you don't feel like you are getting your money's worth. Which is why it is particularly important to make sure you know what will happen if you ever decide to leave.

In the old on-premises days
, your only way to learn about software applications was from a sales representative or going to a trade show - there was no way to do your own on-line research. Plus there didn't use to be community forums where you could ask questions of other users, or places like the AppExchange where you can read reviews from other businesses like yours. At best you might be able to talk to a couple of references that were hand-picked by the vendor.

In the old days, a demo was almost never representative of what you would see in real life, and you could certainly never trial applications like Oracle and SAP. And once you bought the software you owned it - so it was your problem to make it work.

So my conclusion is that what is different about the SaaS buying cycle is really nearly everything - if you change your buying process to take advantage of all of the resources now available.

My favorite "slam dunk" question was from someone in the audience who asked me why NetSuite refuses to offer monthly or quarterly contracts. You'll have to listen to the event to hear my answer, but in related news today it seems that the latest research from Piper Jaffray uncovered low customer satisfaction with NetSuite.

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