Inside Supply Management Magazine

Strategies When Contractingfor SaaS Systems

May 18, 2016

Buying Everything as a Service

ISM2016 session on Tuesday, May 17

Presenters: Mark Trowbridge, CPSM, C.P.M., MCIPS, principal, Strategic Procurement Solutions, and Pierre Mitchell, chief research officer and director, Spend Matters and Azul Partners.

There are many choices when it comes to SaaS, PaaS and IaaS products, and contracts offered by providers can vary in coverage and fees, the speakers say.

Key takeaways:

Make sure you know what a contract covers and allows, and what fees and costs are before signing a contract. Consider the following: Setup and integration costs; uptime guarantees and penalties; locked in and escalating fees, especially for data storage; data security and ownership; tailoring and customization fees; and business continuity protection.

Pay careful attention to the contract’s verbiage, including payment due dates and whether service can be turned off if payment is overdue by a certain period.

Most Saas systems come with term rather than perpetual licenses. You may incur fees to access another supplier’s system as well as maintenance fees for licensed solutions.

Have an exit strategy plan in place before the term of a contract ends.

Look at potential providers’ developmental opportunities.

Ask other practitioners what discounts they are getting before agreeing on a price.

ISM2016 is May 15-18 in Indianapolis.