Most surveys concentrate on attitudes of buyers looking to make a binary decions between SaaS and on-premise solutions before they enter the buy cycle. Few review the position after a decision is taken. It is important to look at the situation after the event because it provides insights into the factors currently playing into the decision process. Circumstances will vary depending on the solution selected but I had not seen any hard evidence of what is happening in the mid-range of buyers. FinancialForce recently polled some of its users to discover why they selected their solution. [Disclosure: I had input into the framing of the questions.] The results are interesting for several reasons:
- There was clear evidence that existing experience with SaaS/cloud figures heavily as a motivating factor in acquiring a SaaS/cloud based solution to their accounting needs
- The basic motivating factors we commonly see in buying decisions in the on-premise world are reflected in the SaaS/cloud model suggesting that fundamental buying motivators do not necessarily change simply by going to this method of solution acquisition.
- Functional fit remains a top priority, even when looking for SaaS/cloud based solutions with 78% of respondents
- Buying cycles are shortening. Nearly two thirds of buyers are making that buy decision in less than three months with 23% doing so in less than a month.
However, there were some surprises along the way that are worth noting.
While the overwhelming number of respondents (89%) were looking for integration to Salesforce.com (remember FinancialForce.com uses technology Salesforce.com provides as the basis for development) the following reasons were also cited as factors playing into why buyers looked at FinancialForce.com:
- 64% were looking to move applications to the cloud
- 50% wanted an improved billing process
Multiple reasons were cited as explanations for the emphasis on integration:
- Seamless order to cash process: 55%
- Reporting consistency: 73%
- Ability to improve process: 86%
It should be no surprise that despite years of functional silos, buyers recognise the advantages of an integrated solution.
Vendor reputation remains an important buying factor with 89% saying it was either important or highly important as part of the buying decision. I’m not certain whether this is a surprise or not but 57% said that internet based search was part of their due diligence. What I do know is that buyers are far more dependent upon what they find on the internet as they walk through the buying process. In my experience, this often occurs as businesses are getting closer to the buying decision and are assessing risk among short listed candidates.
There is this idea that the internet changes everything. It certainly seems to be impacting buying decisions. Only 14% said that ease of selection was about the same as in on-premise situations. A resounding 79% said it was either much easier or somewhat easier. Remember this is a self selecting group but in this specific case, it does suggest the quality of information being found on the Internet or via attendance at webinars (43%) plays into the equation.
Trial runs are more important than I suspected for this class of buyer with 61% saying they spun the wheels in this way and 83% rating the trial as important in their decision process. That may well explain why the buying cycle was reduced.
Remember this was largely a self selecting group because these are organisations that selected FinancialForce.com and are overwhelmingly interested in Salesforce integration. Even so, the results suggest some changes in behaviour among buyers that are worth considering. What is clear is that while traditional influencers still have their place in either face to face evaluations or analyst reports, buyers are seeking a wider body of information they mostly find on the internet. That may lead to increased risk over time but it is not showing up in these findings.
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As a (very happy) Xero user since last October and I can tell you that my number one priorities were functionality and usability having had to wrestle with Sage in my last company, which swallowed up enormous amounts of admin time just trying to generate basic reports. Xero also connects directly to our HSBC bank feeds, which saves even more time and reduces errors. The fact that Xero is cheaper and in the cloud are important bonuses, but these weren’t the main considerations. Too many industry watchers (present company excluded) are totally failing to recognise that fact that a lot of cloud software just works better and is easier to use and that’s why people are choosing these alternatives. You would have to wrestle Xero from my cold, dead hands!
As a (very happy) Xero user since last October and I can tell you that my number one priorities were functionality and usability having had to wrestle with Sage in my last company, which swallowed up enormous amounts of admin time just trying to generate basic reports. Xero also connects directly to our HSBC bank feeds, which saves even more time and reduces errors. The fact that Xero is cheaper and in the cloud are important bonuses, but these weren’t the main considerations. Too many industry watchers (present company excluded) are totally failing to recognise that fact that a lot of cloud software just works better and is easier to use and that’s why people are choosing these alternatives. You would have to wrestle Xero from my cold, dead hands!
Dennis, I think one key factor is that businesses are coming to realize that, for most of the time, all they gain from buying and running their own software is a whole lot of extra costs and hassle. There are some – but very few – areas where you do something special with software, where there might possibly be a reason for owning it, managing it and customizing it. But most of the time this is an illusion – it just has to do the job its designed for. Nicholas Carr captured this well in “The Big Switch” but Gary Hammel and CK Prahalad had nailed exactly the same insight (albeit framed very differently) in their writing on core competencies of the corporation two decades earlier.
Dennis, I think one key factor is that businesses are coming to realize that, for most of the time, all they gain from buying and running their own software is a whole lot of extra costs and hassle. There are some – but very few – areas where you do something special with software, where there might possibly be a reason for owning it, managing it and customizing it. But most of the time this is an illusion – it just has to do the job its designed for. Nicholas Carr captured this well in “The Big Switch” but Gary Hammel and CK Prahalad had nailed exactly the same insight (albeit framed very differently) in their writing on core competencies of the corporation two decades earlier.
Here’s a mind bender : Why are people selecting SaaS accounting apps? Because cloud app vendors have to work harder to compete for preferred supplier status which drives innovation and value for the end user, whether thats a business or an accounting firm.
If you run an on premise app it’s likely that the organisation carries an infrastructure management overhead, whether that’s managing or applying updates, data backup, security or training. Specifically in an accounting practice scenario, the moment you choose to adopt an alternate app from another vendor, you double up on that overhead. This results in a situation where practices are forced to limit their adoption to one or maybe two apps. This results in inertia which makes practices reticent to adopt multiple solutions or change solutions and in turn makes software vendors passively lazy. It also leads accountants to blindly (and ignorantly) insist one a one-size-fits-all recommendation to their clients, regardless of whether it fits some clients better than others – the client bears the compromise.
While adoption of multiple cloud apps still carries some management and training overhead, my instinct says that it’s sufficiently lighter to result in a situation where accounting practices can choose to adopt multiple cloud apps that are closer fits to their different client’s requirements. This creates a situation where not only are the vendors kept on their toes for fear of their share of the practices focus shifting to competitor solutions, it drives the vendors to fight for that focus by endeavouring to be the preferred supplier, if not the sole supplier, by delivering better support, value, innovation etc.
For the accounting firms (and their clients) this is as much of a win as is the removal of the infrastructure overhead as it pushes the vendors to knock it out of the park on all dimensions every month – the ultimate prize being if they do a good enough job on all metrics, then they may eventually win that prize of solus supplier focus.
Has to be good for the customers, accountants and ultimately the vendors that can walk and chew gum over the medium to long terms.
Here’s a mind bender : Why are people selecting SaaS accounting apps? Because cloud app vendors have to work harder to compete for preferred supplier status which drives innovation and value for the end user, whether thats a business or an accounting firm.
If you run an on premise app it’s likely that the organisation carries an infrastructure management overhead, whether that’s managing or applying updates, data backup, security or training. Specifically in an accounting practice scenario, the moment you choose to adopt an alternate app from another vendor, you double up on that overhead. This results in a situation where practices are forced to limit their adoption to one or maybe two apps. This results in inertia which makes practices reticent to adopt multiple solutions or change solutions and in turn makes software vendors passively lazy. It also leads accountants to blindly (and ignorantly) insist one a one-size-fits-all recommendation to their clients, regardless of whether it fits some clients better than others – the client bears the compromise.
While adoption of multiple cloud apps still carries some management and training overhead, my instinct says that it’s sufficiently lighter to result in a situation where accounting practices can choose to adopt multiple cloud apps that are closer fits to their different client’s requirements. This creates a situation where not only are the vendors kept on their toes for fear of their share of the practices focus shifting to competitor solutions, it drives the vendors to fight for that focus by endeavouring to be the preferred supplier, if not the sole supplier, by delivering better support, value, innovation etc.
For the accounting firms (and their clients) this is as much of a win as is the removal of the infrastructure overhead as it pushes the vendors to knock it out of the park on all dimensions every month – the ultimate prize being if they do a good enough job on all metrics, then they may eventually win that prize of solus supplier focus.
Has to be good for the customers, accountants and ultimately the vendors that can walk and chew gum over the medium to long terms.
I’m a bit suprised there was no mention of a benifit of SaaS being continuous upgrades and “subject matter expert” support during and after the implementation. We have implemented 13 SaaS applications in our organization. I have implemented a number of them and I entered the implementation knowing little about the domain and finished the implementation understanding the ins…outs, why’s and why nots of best practices we should be following. Basically the SaaS vendor trained me on the domain area I was implementing.
Regarding continuous upgrades, I was dumbfounded earlier this week to find out Business Objects is having their first major release “in four years” next month. WOW as much as the Business Intelligence industry has changed in four years, to not have a major release in that length of time is shameful. Our BI SaaS vendor puts out a new release every quarter.
I’m a bit suprised there was no mention of a benifit of SaaS being continuous upgrades and “subject matter expert” support during and after the implementation. We have implemented 13 SaaS applications in our organization. I have implemented a number of them and I entered the implementation knowing little about the domain and finished the implementation understanding the ins…outs, why’s and why nots of best practices we should be following. Basically the SaaS vendor trained me on the domain area I was implementing.
Regarding continuous upgrades, I was dumbfounded earlier this week to find out Business Objects is having their first major release “in four years” next month. WOW as much as the Business Intelligence industry has changed in four years, to not have a major release in that length of time is shameful. Our BI SaaS vendor puts out a new release every quarter.
@ric – not all SaaS apps offer continuous upgrades. Salesforce.com put out 500 releases last year but only 3 of those were major rels. Most others were bug fixes or very minor changes. All but the major changes were seamless to the user with almost zero downtime.
On BOBJ – well – are we comparing apples and apples? BOBJ is one heck of a beast…
I’m a bit suprised there was no mention of a benifit of SaaS being continuous upgrades and “subject matter expert” support during and after the implementation. We have implemented 13 SaaS applications in our organization. I have implemented a number of them and I entered the implementation knowing little about the domain and finished the implementation understanding the ins…outs, why’s and why nots of best practices we should be following. Basically the SaaS vendor trained me on the domain area I was implementing.
Regarding continuous upgrades, I was dumbfounded earlier this week to find out Business Objects is having their first major release “in four years” next month. WOW as much as the Business Intelligence industry has changed in four years, to not have a major release in that length of time is shameful. Our BI SaaS vendor puts out a new release every quarter.
@ric – not all SaaS apps offer continuous upgrades. Salesforce.com put out 500 releases last year but only 3 of those were major rels. Most others were bug fixes or very minor changes. All but the major changes were seamless to the user with almost zero downtime.
On BOBJ – well – are we comparing apples and apples? BOBJ is one heck of a beast…