The “pay-as-you-go” subscription model of software-as-a-service (SaaS) provides many benefits to small and mid-sized companies.   The ability to purchase powerful ERP, CRM and HRIS technologies with a limited upfront financial commitment and minimal on-premise infrastructure is viewed as a huge plus for many organizations.

While SaaS is an excellent application delivery model, the evaluation and implementation still requires equal levels of assessment and execution rigor as traditional software products.   As with any major purchase, proper due diligence is required and attention to functional and operational detail is key.  Skipping steps in the process often gives the project the illusion of speed, however more often than not customers are dissatisfied with the results.

On the positive side, making an informed selection means that you will be establishing a relationship with a vendor that will most likely last 10+ years.  On the downside, choosing the wrong vendor can mean a botched implementation, unstable operations, lack of compliance and post implementation chaos.   In the latter situation, often the organization slides back to the Evaluation stage within a year of the failed implementation attempt.

In order to provide the proper rigor to the SaaS evaluation problem, HBSC’s Methodology breaks the overall process down into four (4) manageable phases:

• Phase 1 – Evaluation
  – Needs Assessment
  – Process and Pain Point Analysis
  – RFP Evaluation and Selection
• Phase 2 – Implementation Planning
• Phase 3 – Implementation
• Phase 4 – Post implementation Support

As mentioned earlier, many HRIS Evaluation and Selection projects fail to meet their objectives because they skip critical steps in the process.  We have observed organizations make the following evaluation errors:

1. Not spending the time to capture existing and potential future business requirements upfront.   Often organizations use generic templates to understand basic functional offerings that may or may not meet the business’ objectives.    This creates a situation whereby any of the products appear to meet the organization’s needs and often leads to a random selection or no selection at all.
2. Not capturing the areas of unique business process that need to be supported.  Many vendor products claim that they support key functionality, when it fact the product actually requires significant amount of customization that adds additional time, expense and risk to the project.   A good example of this can be found when organizations fail to properly analyze the needs of their mobile workforce.
3. Failure to vet the vendor from a security, back-up and disaster recovery perspective.  Security needs to be considered such as SAS70 compliance, HIPPA and security audit frequency.  Clients also need to consider if they will have real-time access to log files given that most of these solutions are multi-tenant.   In short, the organization’s IT group needs to be involved in vetting the security of the application and colocation hosting.
4. Failure to vet vendor operational stability.  Not understanding the vendor’s service track-record regarding outages and lost data is also a major concern.   Along with making sure that vendors have reliable and secure infrastructure, evaluation teams need to make sure that outages are not going to hobble their organization.  Some SaaS vendors cannot meet specific operational needs of the Enterprise in terms of Service Level Agreements (SLAs).
5. Failure to vet vendor financial stability.   Many evaluating organizations do not look at the financial health or market share of particular vendor products.    Some SaaS providers are saddled with significant amounts of debt and/or have never generated any profits.  This is a potential red-flag and vendor viability may derail the implementation.
6. Not understanding the amount of required integration.   Many organizations believe that establishing “out-of-the-box” integrations and operationalizing them with third-party vendors will be a trivial task, only to find-out how error-prone and time consuming it can be.   

HBSC Strategic Services has helped many Clients evaluate and implement SaaS solutions across their enterprises. The end results were improved functional capabilities, compliance, increased margins and significant gains in operational efficiency and scalability.