In recent conversations with several prospects, we learned that they are implementing (or just implemented) an “out-of-the-box SaaS AP automation solution." Actually, the vendors involved represented their AP automation solution as being “out-of-the-box.” However, the reality of their implementation turned out quite different. By the end of the first week, the customers learned that extensive customization was required to address their stated requirements. “The demonstration we viewed in the sales process turned out to be a highly configured version of their software that was designed for a specific customer,” according to one customer. “Fourteen weeks of heavy IT involvement does not sound like out-of-the-box to me,” said a second.
Somewhere along the way, some software companies forgot what SaaS (software-as-a-service) is all about. SaaS is based on the concept of a shared code set running in the cloud across a diverse set of customers. For the purpose of this blog post, the key words here are “shared code set.” No longer would each customer run their own instance of software. Instead, best practices are embedded into the application, allowing for rapid implementation and deployment, and a lower cost of ownership.
Shared code set does not imply rigidity. The best SaaS solutions have the ability to tailor the application to meet the needs of the organization. They refer to this as “configuration.” Configuration is different than customization. Configuration is done during the implementation process, typically through a GUI designed for the system administrator. For instance, AP Express has dozens of configuration options that can dramatically change the way the system operates? For example, by checking a box in the setup screen, an administrator can:
No coding is required. Customization, on the other hand, is done in the guts of the application. Code is altered to meet a specific customer’s requirement and routines are built to move data between systems. The anticipated “out-of-the-box” implementation quickly goes “out-the-window,” and responsibility for maintaining the customized code is offloaded from the vendor to the customer…forever.
Early SaaS entrants were consummate disruptors. In the span of just a few years, they overtook established software vendors and plundered their customer base, and for several reasons. First the cost of implementing the solution was dramatically lower, and so was the risk of failure. Secondly, SaaS vendors leveraged cloud computing platforms with significant economies of scale. Thirdly, the ongoing cost to maintain the solution became the responsibility of the vendor, not the customer. Finally, vendors were able to quickly enhance and extend their software applications. They no longer had to patch bugs in earlier versions and had no responsibility for providing upgrade paths to new versions of the software. They were completely unencumbered and free to focus on performance and building innovative features for everyone. As a result, the total cost of ownership of SaaS applications was an order of magnitude less expensive than a typical on-premise software solution.
“We only realized after we signed the contract what we were getting into.” That’s the refrain we commonly hear from customers jilted by vendors promising “out-of-the-box.” How can you guard against this? In next week’s blog, we’ll provide a list of the steps you can take in determining the best “out-of-the-box” AP automation vendors.