Dejargonificationing: Vendor Viability

Theres lots of jargon thrown around the world of business, and even more thrown around in IT. So the software business is drowning in it.

Im going to attempt to de-mystify some of the common phrases that are cropping up around the world of SaaS. Im starting with an easy target: vendor viability.

How viable is the vendor? In other words, is the company youre buying your software from going to be around in a years time? What about in five years time?

The barriers to entry in the software as a service world are very low. Any half decent web developer can put together a web application, make it available on a subscription basis and make a professional looking web site promoting it then lose interest or run out of money in a few months time

In the old world where you bought your software on a CD, this didnt matter too much. Youve got the software so if the company you bought it from disappears then you wont get support or upgrades, but you still have the software you bought and can continue using it (although even that isnt a given with some of the recent shenanigans).

With SaaS, its different. You access the software on the providers server so if the provider disappears, so does your access to the software (and your data).

One form of insurance against this happening is anescrow agreement. The software provider gives all of their code to a third party and if said provider goes out of business, the third party releases the software to previously agreed companies (usually key customers). So the theory is that you can set up your own servers to run the software. Fancy doing that? Unless youre a techie, I doubt it very much.

The reality is that there are no guarantees that any company thats around today will be around in a years time, never mind five. Having said that, there are steps you can take to minimise your chances of getting burnt:
– does the vendor have a sustainable business model? (hint: giving software away for free isnt sustainable)
– are they making profit or do they at least have good financial backers? (or better still, both)
– do they have many customers?
– are they growing?

To further hedge your bets, you need to make sure youre regularly getting your data from your SaaS provider in a format you can access without their software.

If youre reading this from the perspective of a SaaS start-up, then provide the functionality to provide these backups. And automate it so its one less thing for customers to worry about or have to remember to deal with. With KashFlow you can set the system to automatically and regularly email you a backup of your accounting data in a format that can be opened in a spreadsheet or imported directly into Sage.

A side note here; the vendor may well be here in 5 years. But will the product? In just the accounting software industry alone weve seen big companies (Microsoft, Iris, Intuit, etc) withdraw software products with very little notice. They can get a way with that with desktop software, but its not acceptable in the SaaSworld.

If there are any other pieces of jargon that you want busting, let me know using the comments below.

Tags: jargon

This entry was posted
on Wednesday, October 6th, 2010 at 12:06 pm and is filed under Cloud Computing / SaaS, Small Business, Technology.
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