SaaS delivers elasticity for regional enterprises but has its share of challenges offering scope for CIO negotiation advise executives from AVEVA, Check Point Software Technologies, Confluent, Fortinet, Omnix International, PlanRadar, Software AG.
Modern organisations need a data strategy to match their employees and customers’ instant need for information at their fingertips. The digital first world is changing industries significantly, forcing organisations to rethink their data strategy.
“Instead of piecing together old data from multiple on-premises databases or clouds, companies need a continuous flow of data to make appropriate decisions at a fast pace, often instantaneously,” says Fred Crehan, Area Vice President, Emerging Markets, Confluent.
Cloud has become the new normal for a modern IT infrastructure. As the usage and use cases grow, the operational challenges of managing a complicated distributed system grow at the same time. When moving to the cloud, enterprises face challenges due to complex sizing, load balancing or planning and provisioning storage limits.
“To truly realise the value of the cloud and focus resources on business growth, enterprises need a fully managed cloud-native service that takes away these operational complexities. The ideal solution operates seamlessly in a multi-tenant architecture, scales resources elastically and adapts to highly automated, data-driven operations,” adds Crehan.
Elasticity for example is the cornerstone of cloud-native computing. It allows businesses to scale quickly, add resiliency to a system, and make products more cost effective. Enterprises should expect their data streaming platform to be able to scale up and down rapidly and easily to meet their demand.
“Often enterprises are over provisioning because they cannot scale their solutions as they need it. The ideal solution should be able to scale right before the traffic hits and shrink fast when traffic slows down again. That way, enterprises can avoid overpaying for any excess capacity,” says Crehan.
Innovations in SaaS
Latest innovations in SaaS solutions include low-code or no code development, which involves creating applications without coding expertise, democratising software development and empowering businesses to create solutions themselves. Another innovation is offering data analytics and visualisation tools that helps users make better decisions based on the data collected and analysed.
Cloud-native architecture, allows faster deployment and scaling of solutions, along with greater flexibility and resiliency. Additionally, there is artificial intelligence and machine learning which enhance the capabilities of products, providing greater insights into customer behaviour, streamlining workflows, and automating manual processes.
SaaS solutions have faster deployment and lower upfront costs compared to traditional software solutions, as they typically involve a subscription-based pricing model. Another merit is their scalability. SaaS solutions can be scaled according to business needs, making it more flexible. It also gives access to the latest features as these solutions are typically frequently updated.
“However, there are some short-term challenges as well. SaaS solutions may need to be integrated with existing systems. Also, customisation options are limited compared to on-premises solutions, which is a drawback for organisations that require customised solutions to suit their unique requirements,” says Walid Gomaa, CEO Omnix International.
Industrial operators can benefit from seamless real-time data sharing on the cloud with guaranteed security both from the SaaS partner and the public cloud service provider host. This eliminates precarious alternatives that are expensive to set up, difficult to manage, or create unnecessary security risks.
Accenture estimates 95% of companies which prioritise cloud also lead in performance KPIs. SaaS, like AVEVA Data Hub, are fully vendor-managed eliminating the need for hardware and other CAPEX costs, maintenance, and IT support, resulting in cost savings that grow over time. Additionally, the absence of development or integration requirements allows for faster value realisation within hours, rather than weeks or months.
“With AVEVA, all SaaS is offered through our industrial platform that simplifies software procurement and license management, so CIOs can streamline the negotiation process and build cost efficiencies while driving their organisation’s top digital transformation priorities,” says Gregg Le Blanc, SVP Cloud Platform Business Unit, AVEVA.
The economic advantages, speed, agility, flexibility, and elasticity are the main reasons many CIOs are adopting SaaS. Because SaaS makes a wider range of applications available at a lower cost, smaller organisations can also use them to disrupt otherwise impenetrable markets. However, despite these benefits, security remains a significant challenge. Adding cloud applications and environments to your network expands the attack surface and introduces gaps in security.
“Each cloud vendor approaches security in a different way, making consistent policy and meaningful visibility very difficult. Security measures are often piecemeal and isolated. Some key security challenges include poor visibility, no integration or coordination, reactive security,” says Kalle Bjorn, Senior Director, Systems Engineering Middle East, Fortinet.
In this era of zero-day threats and shrinking intrusion-to-breach windows, businesses cannot afford to be reactive in their security approach.
“For this reason, organisations should consider adopting a cybersecurity mesh as part of their collaborative ecosystems, helping to ensure end-to-end visibility and rapid response in the case of a security incident,” adds Bjorn.
“One major challenge with SaaS Security solutions is that many only target a specific set of cloud applications, often those from within the same brand or suite of programs. Most businesses, however, use a wide range of programmes, including common platforms like G-Suite and OneDrive, as well as specialised enterprise software. By harnessing advanced technologies such as AI and machine learning, they proactively counteract hackers and ever-evolving threats,” says Ram Narayanan, Country Manager, Check Point Software Technologies, Middle East.
SaaS security refers to securing user privacy and corporate data in subscription-based cloud applications. SaaS applications carry a large amount of sensitive data and can be accessed from almost any device by a mass of users, thus posing a risk to privacy and sensitive information.
Challenges may arise, such as data security concerns, integration complexities with existing systems, and potential vendor lock-in. In the medium term, CIOs can experience increased operational efficiency, improved collaboration, and better cost predictability. However, they must carefully manage data governance, vendor relationships, and ensure proper integration and interoperability with other IT systems.
CIO game plan
“CIOs can build cost efficiencies when negotiating SaaS contracts by adopting a strategic approach,” says Check Point’s Narayanan.
Firstly, they should thoroughly assess their organisation’s needs and evaluate different vendors to find the most suitable and cost-effective solution. CIOs can negotiate pricing based on factors such as user volume, usage patterns, and contract duration.
They should seek flexibility in terms of scaling up or down the subscription as needed. Additionally, CIOs can explore options for bundled services or discounts for committing to longer contract terms. Regularly reviewing and optimising the usage of SaaS resources can further help identify cost-saving opportunities and ensure that the organisation only pays for what it needs.
According to Omnix International’s Gomaa, CIOs can build cost efficiencies when negotiating medium to long term SaaS contracts by understanding and negotiating subscription pricing and evaluating bundling options. This aids in having better cost efficiencies when negotiating SaaS contracts.
They can also work with their teams to optimise usage of SaaS solutions to ensure that only necessary features and functionality are used. Further, CIOs should carefully review renewal terms and negotiate based on the solutions usage.
“To build cost efficiencies in medium to long-term SaaS contracts, CIOs should conduct thorough vendor evaluations, compare services, features, and pricing, assess current and future needs to negotiate sustainable contracts and avoid unnecessary overprovisioning,” says Ibrahim Imam, Co-Founder, Group-Co-CEO, CEO MENA, and APAC at PlanRadar.
Request transparent pricing, ensuring a clear understanding of all costs and features, including add-ons and data migration needs. Leverage multi-year commitments for volume discounts and better contract terms. Decision makers should opt for bundled services, combining multiple addons from a single vendor for discounted pricing.
Establish clear exit strategies, addressing data ownership and migration to mitigate vendor lock-in risks. Periodically review contracts to optimise usage and renegotiate terms based on evolving organisational needs, recommends PlanRadar’s Imam.
Organisations must monitor and regulate their spending on SaaS subscriptions since businesses need to quantify ROI for every SaaS service their teams find necessary, justifying cost against value.
“A contract agreement of a SaaS subscription is not an easy task and certainly warrants organisation’s due diligence,” indicates Muhammed Mokhtar, Regional Chief Architect, Middle East and Türkiye, Software AG.
To maximise the value out of a SaaS contract, the most obvious aspect is prices. SaaS services prices can be negotiated, especially with multi-year commitment contracts. The pricing model is relevant; is it flat rate, consumption-based, tiered, per-user, or per-feature, pricing?
Businesses must familiarise themselves with key contract terms and negotiate with the provider on how these are interpreted within the contract. For example, does licensee refer to the organisation itself or the end user? Obviously, the SaaS service contract will pass on usage rights to the customers.
One needs to guarantee if the contract addresses the company’s performance and availability mandates, since any irregularities or distribution of the service will impact its revenue and eventually the bottom line.
Businesses should be aware of the scope of the license for each service as defined in the contract if it is limited to named projects or if it is also available to be used across all the organisation’s initiatives throughout the duration of the contract. Many other aspects regarding SaaS contracts are equally essential such as warranty, indemnification for breaches or confidentiality, support, obligation, liability.Click below to share this article