Should the SaaS customer beware and be educated?

I had a long talk the other day with a customer who had just decided to implement SAP’s Business by Design hosted solution. The company (it wouldn’t be fair to him to name the company) is about $150 million in revenue and made the decision to move away from a home grew, inefficient system and migrate to Software as a Service (SaaS). He was excited for several reasons: he would need fewer people in the IT organization, he would buy fewer new servers, he didn’t have to worry about the details. He was reassured that the Business by Design product was called a Service Oriented Architecture based offering.

Now, I am a professional troublemaker, so I asked him the type of questions that I ask my clients about the longer term implications of buying software (even if it is hosted). Here are the questions that I asked him:

1. How do you know that the product is based on SOA?

2. Where is your data? What is the underlying database for your company’s data. How do you know that your data is clean? How often is that data backed up and where it is backed up?

3. Do you actually own your data? Is it available to you on a regular basis? If you take your data can you move it to another platform if you need to?

4. How easy it is to integrate the SaaS platform with either existing software you plan to ocntinue to use or new software?

5. If you should outgrow the platform what are your options?

6. What if you suddenly decide to take the software in house? Can you do this with the same company?

7. Do you have an internal person who understands the software well? If not, you may just have to take the vendor’s word that the software does the job you expect.

Now, don’t get me wrong. I like the SaaS model a lot. It is a very important trend that will be a lynch pin of many small and large companies strategies for many years to come. However, SaaS is not someone else’s problem. It is the customer’s problem to be on guard and educated. Ignorance and trust can sometime be dangerous bed fellows.