Three things to think about before renewing that SaaS license

With many solutions delivered through a SaaS model, renewal time is a good time to take stock in the value of the solution. Before you sign the renewal here are a few things you should consider.

Are you using the solution the way you expected?

It’s easy to get swayed by a slick marketing pitch or the momentum of the masses when you make an initial decision, but now that you’ve lived with a solution for a few years it’s time to take stock and assess the real value. Ask yourself a few questions. How easy is it to get users fully trained? What percentage of the capabilities are you really using? Does the solution fit your needs, or did you adjust to fit the solution? Take a quick survey of your users to assess how frustrated they are with the current solution. One true adage is that if the users won’t use it, the ROI is always negative.

Okay, time to be honest. Is the solution a good fit, tolerable fit, or bad fit? Dig out that initial ROI assessment and see if the benefits you’re receiving still generate an ROI against your current pricing. By the way, this is great data to use when the vendor account manager you haven’t seen in years asks for a price increase at renewal time.

Is switching worth it?

Switching costs are not the insurmountable barrier they once were. In the old days of on-premises software, the high purchase price and long depreciation schedule forced many organizations to keep solutions long past their freshness date. Today, swapping from one SaaS solution to another is often a well-traveled path supported by vendor consulting teams that specialize in the process. Many vendors offer flexible pricing for this consulting, making the technical challenges to deploying a new solution far from as bad as it might seem.

Assessing the value of a switch is another matter. We look for an incremental ROI greater than 50% from a vendor whose management team is strong and whose product roadmap is aligned with an organization’s needs. Look for fundamental benefits in the new solution such as unified records across the solution, flexible integration, scalability, and templatized configuration. These are capabilities vendors need to design into their solution and are not easily added. Screen layouts, tabs, and other items that can be addressed in a regular upgrade cycle are likely just as easily addressed by the current vendor and should not be a driver of change.

Is the grass really greener?

If you made the initial decision years ago you can safely assume everything has changed and there are plenty of alternative solutions with shiny new capabilities. Unless your current solution is terrible, here’s where we suggest taking a “minimizing downside” rather than “maximizing upside” approach to evaluating the alternatives. Look at the alternatives not from your point of view but from the point of view of your competition. Would your closest competitors gain an advantage if they used that new solution, and you didn’t? Would they gain greater capabilities, lower their costs, or increase the productivity of their staff? If they would, you could be in trouble. If not, then competitive pressure is not a reason to change.

Should I stay or should I go?

New solutions come along and exiting solutions become complacent but regardless of the decision, going through the process every time a solution comes up for renewal gives you a clear picture of the value you’re receiving. When a solution no longer delivers the best value, it may be time to move on.