Do you have room for SaaS in your budget?


Get Shift Done: Management

While many businesses adopt cloud-based services as a cost cutting measure, implementing SaaS solutions must fit both your budget and your goals.

The decision to take on new SaaS expenses typically fall into a few categories. Often, the solution is:

  • A replacement for an existing core service,
  • An additional service to meet a newly identified business requirement, or
  • For a solution that isn’t a business requirement, but simply a “nice to have” software.

To help you decide if your businesses is ready to take on the the cost of a new online solution, you should identify the reasons driving the interest, then consider the following steps in your decision to take on the expense:

  1. Take some time to think about your business goals, and if the service helps meet a core need that isn’t currently being met.
  2. If the proposed SaaS solution is replacing an existing service, look at the existing budget for direct costs (system development,maintenance and support) and indirect costs (overhead, administrative/management salary). Factor in all current and proposed costs relating to the people, processes and technologies involved.
  3. There are some useful TCO (total cost of ownership) evaluation tools that offer business owners and leaders a quick and rudimentary way to determine (TCO) of a SaaS model over in-house services.
  4. If the decision is to proceed, figure out the best time to make the move and take on the cost.
  5. Before jumping in with both feet, make sure that sufficient time has been allotted in the planning stage to avoid potential unnecessary issues later in the process. Allow enough time to focus on areas like process and impact analysis, vendor quotes, negotiation and on-boarding.

Don’t Forget to Factor in Opportunity Cost

When planning the budget for a particular SaaS service, also weigh the cost of not having the service. Sometimes it may make more sense to adjust the budget on other line items in to make room for higher priority services that will help meet longer-term, or more critical, goals. For example, for businesses that are still using older legacy systems and manual workarounds to handle accounting transactions and reporting, SaaS offers a more timely and streamlined approach to handling daily transactions, payment processing, financial reporting and tax filing through web-based portals. In situations like this, it makes more sense to shift salary and maintenance intensive budgets towards a more cost effective SaaS licensing model. This also creates an opportunity for employees to be redeployed where their efforts and potential can be maximized.

Not only do you need to ask “do I have room for SaaS in my budget?”, you should also ask “can we afford to forego this solution?” As a business leader the key is knowing why the expense should be taken on. If there’s a compelling need to do so, pinpoint the best timing and consider how best to work the expense into the budget.

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