Software as a Service (SaaS): Why that Second “S” Matters More than You Might Think

If you have started to explore purchasing a Software-as-a-Service (SaaS) application for your institution, you have probably come across several different definitions or interpretations.   Software as a Service provides a lot of advantages, but for many institutions, web based software provides a different set of variables you should explore when selecting the right product.  There is a tremendous amount of information written about SaaS and what to look for, but let’s focus on two items that don’t get as much attention:

  • The second “S”
  • Tradeoffs you should expect

Service with a Capital S

While the benefits of SaaS products or cloud computing for the nonprofit and public sector community have been well documented, to get the true value of the SaaS solution you have to focus on the second “S” – Service.  By service, I’m not referring to the way in which the software is delivered, but customer service. 

Because there is generally little internal IT support for SaaS solutions, it is very important to understand what you can expect from your vendor/partner. 


When you make the decision to buy a SaaS product, you are essentially entrusting this service to a third party, so you will want to understand their customer service protocols.  How responsive is the account team to your problems?  Do they have a policy in place for how long it takes to get back to you?  Is there a cost for better service? What are the ways you can contact them, live chat, email, phone or some combination?  You need to be comfortable with how you can reach your provider and how responsive they are to your questions/problems.  Keep in mind the key to a successful SaaS company is customer retention.  Because the product generally comes at a lower cost initially, it is important for SaaS providers to provide good service to keep you as clients.

Reasonable Tradeoffs

What makes the SaaS model so attractive to many institutions also brings with it some built in constraints.

I really like this software, but it would really be great if it could just do x,y,z as well.  Does this sound familiar?  The reason SaaS providers can offer products at a relatively low cost is because they have created a product that appeals to a large target audience and can spread their initial costs over that audience.  The minute a SaaS provider starts to offer multiple “one off” customized solutions, the cost/pricing structure falls apart.  They can no longer effectively manage each one of those one off solutions because every time there is an upgrade they have to test it and implement it at each customized deployment driving up cost which will eventually be passed on to you. 

This is not to say you are stuck with the initial set of features your purchased, but it may force you to ask a couple of different questions.  How often does the SaaS provider release updates?  One of the key benefits of a SaaS model is product upgrades are seamless and should be driven by the community of users.  The SaaS vendor then can take suggestions from their customers, prioritize them and push them to their clients on a regular basis.  Most of these updates are not new releases of the product, but tweaks or enhancements.  Understand how frequently they release product enhancements and how you can interact with them to make suggestions.  For smaller SaaS vendors these software iterations may happen every 4 – 8 weeks, in other larger organizations with more established products and a larger client base this may happen every 6 months. 

Another issue which pops up when looking to migrate to a SaaS solution is “what do I own?” In almost every case you don’t own the software, you subscribe to it, but you should own your data.  Find out if the vendor has the ability to export that data and in what format.  Do they provide you with tools that you can export the data yourself and in what format?  You may want to run your own custom reports or combine data from multiple systems or simply have the peace of mind.

There are obviously many things to consider in any software purchase, but understanding the basic framework of what you are signing up for is critical to your success.  Software-as-a Service provides excellent opportunities for nonprofit and public sector institutions to utilize software to create capacity and reduce costs.