SaaS Trust Relationships

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In the past few months, I’ve been doing some due diligence on on-demand billing systems that I can tie into my evolving SaaS architecture. As I was doing this, I started to get a look into how responsive some of these companies were and how sales tactics change once you’re through the door and it got me thinking about one thing: trust.

Most of us can agree that billing is probably one of the most important elements of any company offering a product — I know it’s the one that makes me the most nervous when I’m looking at providers who will handle billing for me in a SaaS model. The worst scenario any SaaS ISV can get into is to go with a billing solution that they either lose trust in or the company they’ve chosen begins to layer on extra costs that weren’t outlined in the initial quote or promises at the initial sale are reneged upon once you’re through the door.

This is probably why many companies in the past have either purchased an on-premise solution or have built their own. In the hosting world, many companies have brewed up their own solution to handle the type of billing models hosters have had to deal with, i.e. things like subscription and usage-based billing.

It would be nice to see some of the major vendors with solid, known names move into the on-demand billing space. I think this is also why I thought about the model Microsoft is using with their SaaS push, in particular MS CRM 4.0 (“Titan”). A company can start off with by going with Microsoft or with a partner who builds additional services on top of CRM, and then migrate into either a dedicated solution or an on-premise solution if they either grow large enough to warrant on-premise or lose faith/trust in the company managing their CRM platform. This creates a great continuum and I know it goes against the SaaS model of moving things to the web, but for some services, many companies will be nervous if they can’t switch between SaaS and on-premises, especially when trust has been eroded.

On-demand companies that build a SaaS offering should consider how a customer would move their billing solution to on-premises or to a dedicated platform where they’re not lumped in with a shared set of customers. A company that can successfully build a solution that can start hosted, then migrate to self-hosted will be further ahead, in my opinion, than those companies who strictly offer on-demand billing.

All I know is if I trust you with my revenue stream, then I need to have a method of moving the ability to bill for that revenue in-house if something happens that destroys my faith without forcing me into an expensive migration to another on-demand billing solution.

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