SaaS addiction or how to manage your tech-stack

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Apr 30, 2020

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SaaS are awesome, helpful and easy. A well chosen subscription will help solve your challenge today, tomorrow and months from now.

They will also typically bill you on the same day each month, so it’s easy to expect a charge on your credit card.

One of the CEO’s I worked with openly confirmed with a big smile on his face – “We are addicted to SaaS.”

Yes, I am too.

Ideally, before you sign-up for a new service however, you want to go through the short check-list of things to consider. If you didn’t and signed-up regardless (I am guilty of this too), then you should revisit the checklist and review the services you already have. This will ensure that your business is aligned with services that you engaged to support your goals and mission.

Otherwise, you may end up with a long list of services you don’t need, don’t use and which only make your team less productive.

1. Purpose

To continue being renewed, any service needs to solve your problems.

Does a SaaS product service it’s purpose now? Will it do the same in 3 months? Or 12 months?

Something that you launch as a billing system today (think Chargebee) may never evolve to a point of being a full-blown accounting system (think Quickbooks Online, Xero or Sage). So you shouldn’t hope that an external tool will evolve in the same direction your company does.

2. API or isolated?

The more systems you have in general, the harder it gets to find and use the information. In a perfect world, all SaaS products you have operate in perfect sync and harmony 100% of the time. So whenever you access one system you inherently trust data stored in it.

My most horrible moments of my career have been witnessing the following conversations:

“Remember that Chargebee doesn’t really issue standalone credits, so we need to manually fix it in Xero”

“Yes, but Zoho doesn’t have this API call in the the right format, so not all data flows through to Chargebee, so we need to manually add it later”

“Our internally built system doesn’t talk to Oracle, so we need to manually reconcile revenues, payments collected and Accounts Receivable as often as we can.”

Note, the common word in the list above – manually. It should make any accountant shiver.

It is one thing to manually update something on annual basis or occasionally. It’s completely different to be doing this daily in multiple systems – this leads to errors, loss of data integrity and distrust in IT infrastructure of the company.

Is the chosen product isolated from other systems you have? Does it have an API that you can use to integrate with your CRM, accounting system, email or storage platform?

If it doesn’t have an API, can it be connected to IFTTT (“If This Then That”) like Zapier, Microsoft Flow or IFTTT?

Ideally, all your systems should work in perfect sync to move your business forward, support your employees, customers and partners.

This is not always possible, however. “Life is what happens while we are busy making plans”. The lower the number of isolated systems you have, the better.

3. Time to configure

Just like any other tool, you need to use your chosen SaaS well, which will require some configuration.

The more functionality and flexibility a SaaS product offers, the longer it will take to be configured to its optimal state. You need to weigh that time against your available resources.

Some tools will require very little configuration time and could be done without much support. Calendly, Zoom, ApprovalMax are great examples. You can be up and running within 15 minutes.

Most accounting tools (Xero, Quickbooks Online) will take longer to get setup and will require some knowledge to gain efficiency in the long-run. However, you can still be ready to go within a day with the core functionality (Chart of Accounts, additional payment systems or modules, setting up user privileges, etc).

In my experience, CRM-type systems that house the customer database and have communication capabilities take the most effort and are the most sensitive. Salesforce, Zoho, Chargebee and even Mailchimp take some time to configure and test, as they are customer-facing.

Some of them are easy to setup (Mailchimp), but you still want to allocate time to test properly. You want to send a couple of emails to yourself or to your spouse/friend/mom. No need to risk sending wrong information to the wrong segment of customers or prospects.

4. Do you need to migrate data?

If you just starting out, all systems are new, you don’t have an issue with data migration. However, as your business grows, its needs will change and you may need to move data from one system to the next.

If you are planning to migrate from one platform to the next, the following is a list of things to consider:

exporting data from the previous platform – is it CSV, API-based, scripted or manual entry;

preparing data to fit format accepted by the new platform;

will you need to run the old and new systems concurrently;

how long will migration take;

how many people hours will you have available;

In general, data migration is necessary evil and is never celebrated by management and IT folks. However, once you have migrated to a new system, it truly is a pleasure to see the old data function in the new system.

5. Cost and payment schedule

Everyone must decide for themselves if a cost of a product is worthwhile and is affordable. This will also likely change during a lifecycle of a startup.

A startup before its significant raise will likely be saving every dollar. However, once the first/second/third round of a fundraise is done, its priorities will likely change and growth or product development will be more important than saving $$ on the monthly SaaS spend.

Everyone needs to decide for themselves if a chosen product is worth the price for them.

Billing frequency is important as well. Most SaaS products offer a decent (if not great) discount when you commit to an annual billing cycle as opposed to monthly.

While this provides significant savings you need to consider two things:

Can you commit for full year with this product?

Can you manage your cashflow knowing that you will not be reminded of this cost 12 months from now?

Let me address the second point in more detail. Startup CEO’s like to know how much they spend on subscription-based products. If they simply pick-up the last month’s credit card statement, they will only see the SaaS products billed on a monthly basis.

Therein lies a big risk – it is the very expensive products that startups tend to commit to on an annual basis. Saleforce is a great example. CRM is a foundational system for a lot of companies, so no wonder companies tend to stick to it longer.

However, Salesforce bills annually. Period. The cost is calculated on a monthly basis, but billed annually.

So instead of paying $750 USD per month each month (for 10 users), you will only see a $9,000 bill once a year.

Unless you are managing your SaaS very well, how will you remember that 11 months you will have no CRM costs and then you are hit with a $9,000 cost for Salesforce?

6. Final tips

Monitor your monthly SaaS spend and be on top of it. Some services, if left unattended, will cost you a fortune (over-provisioning of AWS instances anyone?).

Turn off/Pause/Cancel services you don’t need if you can quickly turn them back on.

Do a proper review of all your subscriptions every 3-4 months with your co-founder and/or team. Ask them:

Do we need this at all?

Who uses it?

Is it worth the cost for us?

Are there alternatives?

Lose your company credit card every 12-18 months and report it to the bank as such. They will send you a new card. Doing this will make some of SaaS payments to be declined and your team will be asked to reassess whether the products are really needed.

SaaS are great, but they need to be managed well.

Connect with us, if you want to improve your processes and save money!