Implementing Software-as-a-Service: Vendor & User Benefits to Outsourcing SaaS Implementation

Outsourcing the implementation of software is like separating the wheat from the chaff. You get the best without the rest.

Vendors and their clients both benefit by outsourcing implementation. Software-as-a-Service (SaaS) providers can concentrate resources on more lucrative functions, like product development and sales, by outsourcing implementation. Their customers, meanwhile, can speed adoption, thereby accelerating the return on their investment.

Revenue for cloud software reached $48.8 billion in revenue in 2014 and is expected to continue to experience a high rate of growth reaching $112.8 billion in revenue by 2019. SaaS delivery is growing nearly five times faster than the software market as a whole. SaaS has become a significant growth driver to all functional software markets; the cloud software model will account for $1 of every $4.59 spent on software by 2019, according to an August 2015 report by IDC.

SaaS applications are commonly used in customer relationship management (CRM), enterprise resource planning (ERP), benefits administration and human capital management (HCM).

However, enabling technologies do not achieve full functionality unless planned and implemented properly. Outsourcing implementation helps SaaS vendors and users in the following ways.

Benefits for vendors

Software companies want to develop and sell great products.  Implementation is incidental to their success—and may in fact impede their growth.

As vendors grow and expand they bring in system integration partners to help with SaaS implementation. In our experience, the following are considerations that vendors may discover in bringing on system integration partners.

• Software-as-a-service consultants, which vendors commonly call “system integrators” or “implementation partners,” specialize in project management, implementation and training for SaaS applications.

• Sales could slow. Needlessly long and complicated implementations led by internal employees may limit a vendor’s ability to add customers. Vendors have found that time and resources spent implementing their software could be better deployed elsewhere, like in product development or sales. Implementation projects hold
  the potential to distract SaaS vendors from what they do best.

• SaaS vendors may bear implementation costs for months, or even years, before they fully recapture the costs through clients’ fees. This impairs profitability, which can constrict share prices in the case of publicly held companies or depress valuations for private firms.  Servicing and supporting software post-implementation is
  more profitable for vendors.

• A system integrator can provide service and support to the user before and during go-live. This allows a vendor to focus on servicing and supporting their software post-implementation.

• A vendor knows their product best. Quality implementation consultants know how to leverage the product for the customer’s benefit. They use software to improve workflows and processes based on their business knowledge and project experience.
  In considering whether to outsource implementation, a vendor should weigh considerations like whether doing so would improve valuation, profitability or scalability. Choosing qualified, experienced SaaS professional services firms to implement would then allow them to control costs and quality.

• SaaS specialists take a consultative approach so as to fully
  understand a user’s business process and organizational alignment.
  Then they make relevant recommendations to ensure optimal use
  of the enabling technology.

• Consultants can assist companies in identifying workflow gaps and resolving the gaps with the SaaS application. They fix the process and then tailor the technology solution to the new process.

• Outsourcing implementation properly ensures consistency in delivery.  Vendors generally require system integrators to undergo training, through curriculum and certification courses. Depending on the vendor, consultants may also be able to attain advanced training in specific software modules or for particular project roles.

• Product training and certification fees provides additional revenue for vendors. Vendors commonly charge consultants hundreds of dollars a day to attend on-site training sessions, for example.

• Vendors can expand their sales force and thus generate additional revenue, through value-added-reseller relationships in which SaaS consultants help them secure and service clients.

In considering whether to outsource implementation, a vendor should weigh considerations like whether doing so would improve valuation, profitability or scalability. Choosing qualified, experienced SaaS professional services firms to implement would then allow them to control costs and quality.

Benefits for users

In a web-based survey of more than 539 global business executives, 48 percent reported implementation costs for adopting new cloud-based software was the most challenging aspect of cloud deployment. Another 46 percent stated that integrating existing IT
architecture with new cloud services created challenges, according to a 2014 report by KPMG. Greg Bell Principal, Advisory, Information Protection at KPMG stated, “The question is no longer: ‘How do I move to the cloud?’ Instead, it’s: ‘Now that I’m in the cloud, how do I make sure I’ve optimized my investment and risk exposure?’

As experts in implementing complex IT systems, SaaS consultants can help users optimize their applications.

• SaaS specialists take a consultative approach so as to fully understand a user’s business process and organizational alignment.  Then they make relevant recommendations to ensure optimal use of the enabling technology.

• Consultants can assist companies in identifying workflow gaps and resolving the gaps with the SaaS application. They fix the process and then tailor the technology solution to the new process.

• In assessing the specific needs of companies, functional departments and individuals within them, SaaS consultants typically estimate the amount of support resources needed more accurately than vendors, who often rely on one-size-fits-all benchmarks.

• Unlike a vendor limited by the availability of its internal staff, SaaS consulting firms can deliver an implementation team commensurate with the scale and complexity of a company’s projects.

• SaaS consultants can provide users with a comprehensive total cost of ownership by thoroughly assessing integration expenses and ongoing costs, perhaps more so, and more objectively, than a vendor. In addition to hardware and software expenses, cost of ownership includes opportunity costs like downtime and lost productivity.

• Outsourcing implementation can ensure that a system is built right the first time, thereby mitigating the need to invest additional time and dollars. Proper integration with other technology is also key in enabling users to recoup their investments faster.

• As certified experts with advanced product knowledge, SaaS consultants can speed adoption among a company’s users, through comprehensive training and targeted support. The quicker users adopt, the quicker the company reaps its returns on investment through enhanced efficiency.

• Also, unlike a vendor whose knowledge is confined to their software, an integration partner brings a broad technology skill set and varied experience, which allows them to support the user’s technology team holistically—even after the initial implementation.

Vendors may be able to recommend implementation specialists for a client, but a company ultimately should choose the SaaS consultants best suited for their needs. Users should consider factors such as project methodology, technical and industry expertise, price, and experience on other systems used by the client, as applicable.

Properly planning and implementing SaaS will allow a company to accelerate its ROI. Vendors also benefit from outsourcing implementation in that they can grow more quickly by focusing on development and sales. Concentrating on core competencies allows vendors, specialists and end-users to do what they do best.

About Providence Technology Solutions

An affiliate of The HCI Group, a global leader in healthcare technology consulting that provides cost-effective solutions for healthcare IT implementations and ongoing support, Providence Technology Solutions evolved to develop strategic partnerships
outside of healthcare.

Providence Technology Solutions provides technology consulting and system integration for customer relationship management (CRM), enterprise resource planning (ERP) and human capital management (HCM) systems, as well as staff augmentation and contract resources to support the IT needs of valued clients.

Providence’s team uses its extensive experience to leverage best practices across industries and across technologies, in order to deliver quality, value-based consulting and implementation services for its clients. For more information on Providence Technology Solutions, go to http://www.providencetechnologysolutions.com, or call Lee Shipman at 904-512-6448.