Top 10 SaaS traps

12.06.2006

6. Add-on costs. SaaS customers should scour the fine print for hidden expenses. Sometimes vendors charge to configure the software or implement the database or workflow processes, says DeSisto. In some cases, vendors charge an additional US$18 to $25 per user per month to stage and test the software, he says. And if you want to add support for handhelds and other mobile devices, those costs can escalate to $45 per user per month.

Vendors also may try to predetermine the amount of storage that's available for each end user in your organization and bill for overage charges. "So many people are buying SaaS based on price. They need to understand what the base product is and how much all the add-ons cost," says Rob Scott, managing partner at Scott & Scott LLP, a Dallas-based law firm.

Customers should also ask whether training is "baked into" the cost of the service or if there are additional costs for training or support, says Mankowski.

7. Integration intangibles. If SaaS software has to be integrated with other customer systems, buyers need to determine who's responsible for handling the systems integration and at what cost, Scott says. An "ecosystem" of third-party firms can typically handle this work for less than what SaaS providers charge, says Kaplan.

8. Data rights. Before entering into SaaS agreements, customers should determine where their proprietary data will reside and what rights they have to access that data, says Cicala. "If the deal goes south, you need to know where your data is and what kind of shape it's in," says Mankowski. Customers should also ask for guarantees in writing as to how the data will be protected from both a privacy and disaster recovery standpoint, says Kaplan. Moreover, customers should determine whether they're entitled to back up the data on their own systems should they choose to, Mankowski says.