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13 Pitfalls of Purchasing Cloud-Based Software and How to Avoid Them, Part 1

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This is the first in a 2-part series on managing potential pitfalls when purchasing cloud-based software.

Cloud-based Software-as-a-Service (SaaS) is increasingly becoming the norm in enterprise apps today. In fact, 70% of today’s organizations have at least one app in the cloud.1 Cloud-based software has many benefits over traditional perpetual licensing agreements, but as with any other technological innovation there are pitfalls to be aware of. 

Here are 6 potential pitfalls you could face when purchasing cloud-based SaaS, and how to avoid them. 

1. Not verifying that your cloud software provider is secure

Bear in mind that cloud services are delivered over the internet, meaning your data is susceptible to viruses and hackers. In a recent Forbes survey, 41% of those that were considering adopting cloud technologies had concerns about cloud security.2 Make sure the security measures of your cloud provider meet your requirements. The last thing you want is a virus or to be hacked. 

2. Not ensuring that your cloud software vendor is reliable

Remember that your cloud software/applications are dependent upon the reliability of your service provider and their delivery infrastructure. If their system goes down, your ability to get things done does too. Don’t assume today’s servers are secure. Even large cloud-based corporations like Google Gmail and Amazon have experienced server outages. Make sure your supplier is reliable, and have a backup plan in place for crucial data and critical applications.

3. Not establishing recovery parameters for service delivery problems

Find out how quickly any performance or delivery problems will be addressed, and whether you will get any compensation for downtime. Establishing a timeframe with your SaaS provider to resolve any issue with service delivery is important. For those of you that operate 24/7, it is paramount. Make sure your service provider can fix any delivery problems within hours, rather than days.

4. Not making sure your provider is flexible to your needs

Check that your vendor is adaptable to your IT needs today, and flexible to your future needs. Some SaaS providers use proprietary formats for their services and apps. Verify that your current infrastructure is compatible with the SaaS solution you are considering. Also, ensure that your provider will allow you to increase and decrease the number of users and data limits as needed, and that they can make adjustments as your business grows.

 5. Not having a Service Level Agreement (SLA)

The importance of having an SLA cannot be overstated. It stipulates exactly the level, metrics and quality of service that the vendor will deliver. If they don’t have an SLA or there are sections you are not happy with, draw up your own or modify it to ensure it meets your specific needs. The agreement should also specify what recourse you have if the vendor fails to deliver. 

6. Not understanding your data safety

With SaaS providers, you must understand that some of your data will be stored on their server, and it may not always be in the same country as you. Not only must you ensure that you have access to your data, but you must make sure that it is protected by international laws, is secure, and that there is a disaster plan in effect should there be a need for data recovery. Certify that your provider can guarantee the security of your data and that they will regularly backup your data. Include this clause in your SLA.

At Central Technology Services, we are experts in providing innovative, customized financial solutions that remove budgetary barriers from software and hardware purchases. Take advantage of our innovative purchasing model that optimizes accounting for cloud software with volume discounts based on your future software needs while avoiding the costs of unused capacity. Customized, flexible deployment schedules are tailor-made to match costs to your available operational budget.

Central Technology Services is the software industry’s leading financial services partner specializing in assisting Fortune 1000 companies and their vendors to manage the financial, operational and budgetary issues associated with acquiring enterprise software and related technology assets.

Sources:

  1. Forbes, Analytics, Data Storage Will Lead Cloud Adoption In 2017, November 20, 2016.
  2. Robert Half, Robert Half Management Resources Survey, April 30, 2015.
  3. Smarter with Gartner, Moving to a Software Subscription Model, November 12, 2015.
  4. Gartner News Room, CIOs Flip for Cloud SaaS, September 2016.

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