Category Archives: SaaS

SaaS Contractual Considerations: Part I

Despite the claims to the contrary from the monolithic on-premise players who are threatened by the new platform and all of the advantages it has to offer, SaaS is gaining momentum. The best evidence I have to offer is the rate at which analysts and bloggers, including yours truly, are getting inquiries into how to evaluate these offerings from a functional and TCO perspective and how to construct the contract. And it’s not just buyers who want to know what needs to be in the contract to protect their investment. Providers also want to know what clauses they should be including to protect themselves as well.

As I am not a lawyer, I cannot claim to be an expert on contract construction of any kind, but I can claim to be very familiar with IT contracts (as someone who has always handled his own and been involved in their construction and review at a number of companies) and to have considerable knowledge with regards to issues that need to be addressed on both sides of the table. Thus, I give you the doctor‘s top issues for consideration when negotiating your next SaaS contract in addition to the standard issues of term, fees, liability, representations, warranties, confidentiality, insurance, indemnity, rights, relationship, dispute resolution, publicity, and government law that your lawyers will remind you of in every contract drafting. Today, we’ll focus on the buyer:

For the Buyer:

  • Data Export, Backup, & Security
    It’s your data and you should have full access to it 100% of the time and the ability to extract some of it or all of it on a whim with little or no notice to a standard, open format such as CSV, EDI, or XML. Of course, if the provider is hosting your entire ERP system and you have Gigabytes of data, expect to pay a bandwidth usage fee if you plan to do this regularly, or a service fee if you require the provider to back it up to encrypted DVDs or Tape and courier the data to you. Similarly, it’s your data and you have every right to expect it to be secure and available no matter what. Insure that the provider is required to do complete backups at least daily, incremental backups at least hourly, and required to store a copy of the encrypted daily backups in an off-site location.
  • System Availability & Up-Time
    One of the attractions of SaaS is the 24/7 uptime that your average company IT shop, that works 9 to 5 in one time zone, can’t deliver. Make sure the system has a guaranteed up-time of 99.999% when you need it (e.g. between 8 am PST and 8 pm GMT if your users are predominantly in North America or Europe) and that you have at least 99.5% uptime the rest of the time, with scheduled maintenance only occurring in agreed upon time windows with adequate notice.
  • Pay For Use
    The beauty of SaaS is the scalability it offers you and the ability to add or subtract users as needed. Make sure you’re SaaS agreement only charges you for the number of users with active accounts (subject to any minimum number of seats you might have agreed to) on a monthly basis.
  • Guaranteed Response Time
    There’s no perfect software system and something will inevitably go wrong with on-demand just like something inevitably went wrong with your current on-premise system. Make sure that the provider agrees to start investigating all outages immediately during agreed upon normal operating hours for your business and within 30 to 60 minutes otherwise. Make sure they are required to get back to you with progress within a maximum timeframe of 60 minutes and to report on progress on an agreed upon schedule.
  • Escrow & Guaranteed Availability
    You generally select an enterprise system with the intent of using it for at least the mid-term, if not the long term, and if a system works well for you, the last thing you want to happen is for the provider to disappear (either due to financial failure or M&A) and take its system with it. Thus, it’s important to take precautions that will insure that, no matter what, you will have continue access to the system for as long as you so desire. The way to do this is to (1) insist on escrow and immediate access to the updated source code and related documentation which is to include required system architectural designs, complete installation instructions, and maintenance and support manuals that are kept up to date on every release and (2) forced support for a minimum period of time on material change of ownership, including the option to acquire the system from escrow at an agreed upon perpetual (annual) license cost at the end of the the minimum support period if the acquiring company no longer wishes to support the system.

Be sure to check out the Master “Software as a Service” Managed Services Agreement in the Procurement-Based Contract Templates, Version 2, that is made freely available to you by Stephen Guth of The Vendor Management Office blog.

Integration-as-a-Service … What Does It Mean?

I recently stumbled upon an article published by Supply & Demand Chain Executive last summer on why “customer-facing integration demands a better approach” that claimed to provide a helpful guide to IaaS (Integration-as-a-Service) … and the last part in particular caught my attention. I’m a big fan of SaaS (Software-as-a-Service) because of it’s instant deployment nature in a manner that keeps the IT headaches with the provider (instead of transferring them to the customer who might not be very technically inclined), and I definitely think the -as-a-service paradigm is the way to go for many businesses who need to focus on their expertise and leave the rest to external experts. But is Integration-as-a-Service really achievable? There are many service companies that specialize in, and sometimes only do, integration … but given that every project is unique, can you really box it up? You can box the tools and the methodology but there’s still a custom configuration component that’s pretty hard to productize because it requires expertise and experience that only exists in a human head. So I read the article … and I was disappointed.

The article, which claimed that demand-side customer integration is much harder than supply-side because customer count can exceed supplier count by a factor of more than 50:1, especially in Fortune 500 companies, is essentially repackaging the marketplace concept, updating it to use a Service Oriented Architecture (SOA), and calling it the wave-of-the-future and a strategic enabler. While I believe that CI will deliver the returns that the author is claiming — 29% revenue increase, 10% margin premium, and 99%+ order accuracy — the marketplace methodology being proposed still has many of the drawbacks that caused them to fail the first time around because it is still stuck in the B2B 2.0 world.

Those of you who have taken the time to download and read the B2B 3.0 Illuminations know that B2B 1.0 solutions failed because of high bandwidth, high integration, high network-access costs, and the extraordinarily high data maintenance costs and that B2B 2.0 solutions, that ushered in the first marketplace boom, failed because of dynamic content limitations, limited search, relatively high access fees, and limited connectivity to your supplier or customer base due to network specialization. It’s true that SOA reduces platform construction and maintenance costs, which should theoretically reduce access fees, that SOA allows for significantly better search capability, and that SOA allows for near-real time catalog updates under a push-model, but it doesn’t help with initial integration because a potential user still has to connect their systems and map their internal data formats to the hub, and it certainly doesn’t do anything about the inherent network restriction to “like” member companies. This means that a company may still have large up-front integration costs, will have to develop and monitor scripts to “push” their updated content onto the network or still update their content manually, and will have to be on multiple networks if it wants to reach the majority of its customers, since many customers, especially in retail spaces where margins are slim, won’t be able to afford to be on many networks. In other words, it’s FAIL all over again because SOA doesn’t fix the primary issues that caused marketplaces to fail the first time around.

Thus, although I think the concept of Integration-as-a-Service — interpreted to mean that you use a Software-as-a-Service vendor who specializes in integration platforms and integration projects to create a virtual network for you to do business with your suppliers, customers, and other trading partners — is a great idea, because an IaaS vendor will have the up-to-date tools, methodologies, and expertise required to quickly, efficiently, and cost-effectively connect each of the systems used by the trading partners you connect with, I definitely don’t think a relaunch of the B2B 2.0 marketplaces is the way to go. I’d look at someone like Vinimaya (recently reviewed by the Sourcing Maniacs), with their B2B 3.0 platform that specializes in enterprise search and content management, for my content management and transaction needs; or someone like Integration Point (also reviewed by the Sourcing Maniacs), with their wealth of experience in integrating disparate (legacy) systems into their SaaS global trade visibility platform, for my trade documentation and trade management needs. Done right, IaaS is certainly a logical extension to SaaS, and achievable in the respect that a third party will do it for you, but it has to be B2B 3.0.

To find out more about B2B 3.0, check out the inaugural Sourcing Innovation Illuminations, now available for quick and easy download with No Registration Required!

1. Introducing B2B 3.0 and Simplicity for All
2. Simplifying B2B for Suppliers Enables Buyers
3. Content Enablement Technologies Enable e-Procurement 3.0

The Sourcing Maniacs 2008 Vendor Tour Part 21: Vinimaya

Today’s post has been broken down into vacuity, vindication, and veil.


Vacuity

 

Wakko I never imagined a Stampede could be so much fun!
Editor’s note: the maniacs took a little detour through Calgary after finishing their visit with Upside Software in Edmonton
Yakko It sure is! But we should probably be getting back to our tour. After all, we still haven’t been offered a job!
Dot We’re not done yet?
Yakko We’re only at U!
Dot Precisely. Who uses V, W, X, Y, and Z anyway?
Yakko Well, I’ll admit that a lot of companies start with the early letters of the alphabet, presumably to come first in the listing or to take advantage of common power words, that usually start with M, N, R, S, T and other Wheel-of-Fortune favorite letters, but there are still a few companies left. I’m sure there are at least ten companies in the space that start with V.
Dot Precisely. Who uses V, W, X, Y, and Z anyway.
Yakko Verian Technologies, Vertical Net, and Viewlocity.
Dot Vertical Net is Bravo Solution now.
Yakko Okay, Vendormate.
Dot Touche! So who next. Any recommended by the doctor?
Yakko Let me check.
more flipping through the handy dandy notebook
the doctor mentioned a company called Vinimaya (rebranded Aquiire, acquired by Coupa) when we asked him who the innovative companies were.
Dot What do they do?
Yakko Catalog Management.
Dot Sounds so Web 1.0. What else?
Yakko Looks like they’re billing themselves as the B2B Search Engine now.
Dot B2B Google?
Anything else?
Yakko Looks like that’s it.
Dot Are you sure?
Yakko I think so.
Dot So what are we missing? the doctor says they’re innovative, but catalogs and search have existed for over a decade.
Yakko I don’t know. I guess we’ll have to go find out!
  the maniacs take off for Shelton, CT

 



Vindication

 

Dot Are we here?
Yakko Uhmm, I think so.
Dot I’ll knock.
tap tap-tap tap tap … tap tap
Smiling Man a smiling man opens the door
Howdy! How can I help you!
Yakko We’re a little confused. the doc said you were innovative, but we understand that you do catalogs and search.
Smiling Man That’s right!
Dot And how’s that innovative?
Smiling Man You need to understand, it’s not what we do, but how we do it.
Dot What do you mean?
Smiling Man To use the doctor‘s terminology, we’re B2B 3.0 all the way.
Yakko B2B 3.0?
Smiling Man Business-to-Business 3.0. We provide enterprise software technology that puts business users on the same footing as consumers who have had “3.0” technologies at their fingertips for years. B2B 3.0 is about connectivity that is open and free to all, content that is managed once in a non-redundant fashion by the content owner, and an open community where buyers and sellers can come together for short periods of time through virtual networks that allow them to conduct the business they need to conduct — when, and how, they need to conduct it. We provide the technology platform that, using the open connectivity of the internet, enables innovative content management that allows buyers and suppliers to engage in productive e-commerce.
Dot And how do you do that?
Smiling Man Through content unification. If you go back to the beginning, B2B 1.0 if you will, you had the catalog, which was different in every ERP, procurement, and sourcing application, and which had to be maintained by the buyer — who had to collect data from the supplier to populate their application. This led to stale data, and an inability to find new products in a timely fashion. Then the punch-out came along and helped to usher in B2B 2.0. This was a slight improvement, as the supplier was able to maintain their own catalog, which the buyer could connect to, but there were still issues. The catalog was only as fresh as the last supplier update, which could be months in the past as the supplier had to maintain a different puchout with different pricing for each buyer, and the buyer could only connect to, and search, one punchout at a time.
Dot So?
Smiling Man How do you get the best price?
Dot You review and evaluate all the options.
Smiling Man And how do you do that if you can only search one catalog at at time?
Dot You build a spreadsheet …
Smiling Man Don’t you buy a technology solution to help you with your job? Doesn’t having to build a spreadsheet hinder you? Why not just use Google and search each vendor site individually. It would be just as effective and save you money.
Dot True.
Smiling Man So buyer hosted catalogs don’t work, as they are always stale and don’t have the right prices, or products, and punch-outs don’t work as they restrict a buyer to one site at a time. Plus, both solutions often cost way more money than they’re worth. Sure you can get a catalog solution cheap, but how much is it going to cost you in salaries to keep it up to date? If you’re a large company, millions. And you might think punchouts are cheap, but a supplier has to pay someone to create a separate punchout with distinct pricing for each buyer, and then has to pay someone else to maintain that data. And who do you think pays for that overhead? That’s right, you!
Yakko So what’s the solution?
Smiling Man Our platform.
Yakko And how’s that work?
Smiling Man It’s a web-services enabled agent-based meta-search technology that can plug into any electronic product listing a supplier has at its disposal — be it punch-out, e-Catalog, a web-enabled database, or a plain old ASCII flat file — and integrate the listings into one consistent, coherent view for the buyer.
Wakko So it’s e-Bay for enterprises? A single view into all available products and services that you can search — by product name, characteristic, or price range — to find the best product to meet your need at the best price, right now?
Smiling Man That’s right Wakko! We enable buyers and suppliers to conduct commerce the way it was meant to be — simple, easy, and cost effective.
Yakko That’s it?
Smiling Man That’s it. We’re the first company to utilize the full power of the internet to let buyers and suppliers to conduct business using the technology they have available; we add the ability for both parties to define pricing and presentation rules that are applied in real-time on every search; and our powerful interconnectivity platform allows us to integrate seamlessly with all of the major platforms. What else would we need to do?
Yakko I can’t think of anything else.
Smiling Man Precisely! Sometimes you just have to keep it simple.

 



Veil

 

  we join the maniacs an hour or so later at a diner
Dot So, are we done?
Yakko We’ve done WhyAbe, and the only other W company I know of is WeSupply, but they’re on the other side of the Atlantic.
Dot And the only X company I know of is Xign, but since they’re owned by a bank, we know they’re just payments, which isn’t that exciting.
Yakko I don’t know of a single company in the space that starts with Y!
Dot I guess that brings us to …
Yakko, Wakko, & Dot … Zycus!
Wakko Aren’t they based in India?
Dot They are. But don’t they have US locations?
Yakko They do, but they’re mainly sales offices, and the doctor says he hasn’t had any luck getting a response from them locally.
Dot I guess we’re done for now, then.
Yakko It’s probably for the best. I’m feeling a chill in the air, and I don’t like the cold as much as I used too.
Dot We did get awfully used to the wonderful year-round weather in the valley, didn’t we?
Yakko We did. Let’s go home for the winter. We can start a new tour next year … and maybe, armed with our superior knowledge from this tour, we’ll even find a job!
Wakko And in the mean time, I can be Califorina Dreamin’.
Yakko, Wakko, & Dot All the leaves are brown
And the sky is grey
I’ve been for a walk
On a winters day
I’d be safe and warm
If I was in L.A.
California dreamin’ …
  the maniacs fade into the distance

I don’t know about you, but I think they deserve a 21-gun salute for their efforts. Twenty-one posts and one hundred and thirty pages of amazing content that is so rich that you have to read it multiple times to thoroughly extract all of the nuances is more than some blogs give you in an entire year (or lifetime)! Rest up maniacs, you deserve it!

 

The Sourcing Maniacs 2008 Vendor Tour Part 20: Ketera

This post is a wee bit lengthy, so I’ve broken it into kidding and Ketera.


Kidding

  the maniacs are enjoying themselves somewhere in Alberta
Wakko Hee Haw!
Dot That was a classic, wasn’t it. Did you know it had Canadian roots?
Wakko Yippie Ki Yo Yippie Yay!
Dot We’re in Alberta, not Texas, Wakko!
  ring, ring
Yakko Yakkos Yiddish Yamakas … cheery caps for cheery chaps!
Australian Accent G’day, Mates! You wanted a demo of Ketera?
  if you’ll recall, back in part 12 (Kinaxis) the maniacs asked Ketera for a demo … they were too busy at the time, but promised to get back to the maniacs
Yakko Yes, we did.
Australian Accent Ace! Could you do it now?
  neeiiggghh!
Australian Accent Is that a Brumby I hear? Is this a good time for you blokes?
Yakko It’s just fine. I’ll fire up the satellite and we’re good to go!
Australian Accent Bonzer!
Are you out in the bush, mate?
Yakko No, we’re just enjoying the ranch.
Australian Accent Texas?
Yakko Alberta.
Australian Accent You’re in the Back of Bourke, aren’t you?
Yakko I guess you could say that.
Australian Accent You’re sure it’s a Mickey Mouse time for you?
Yakko No problem. I’m ready.
Dot I’m ready.
Yakko We just need to wrangle Wakko. One sec.
Wakko!
Get your strides over here now!
Wakko Why?
Yakko It’s time for the Ketera demo!
Wakko Now? Here?
Yakko We got sattelite internet, remember?
Wakko glumly
o. k.
Dot You can get back to having fun as soon as we’re done!
Wakko cheering up
A’ight!
  Wakko moseys on over.
Yakko We’re ready to give it a fair go!



Ketera

Australian Accent switching to his best American for the demo
Today I’m going to run through our new e-Sourcing application. It’s pretty straight-forward, so it won’t take much time.
  unlike the maniacs’ walkabout …
Yakko No problem! Take it away.
Australian Accent I should start off by noting that what we noticed was that a lot of people were spending a lot of money on enterprise sourcing applications without using the full extent of their capabilities … most of our catalog, procurement, and supply network customers were just using e-RFX and e-Auction and most of those customers were just using single round RFXs and traditional reverse auctions … not the dozen or so variants that have sprung up over the last ten years.

We saw the need for a low-cost 80% solution that would give the market what we felt it needed most … a basic sourcing solution for small and mid-size companies without large budgets or sophisticated software needs. And that’s what we built.

Our e-Sourcing solution is just RFX and Reverse Auction … and unlike many enterprise applications that take hours, if not days, to set an event up … our solution allows an event to be configured in minutes using a very simple 3-step process.

Step 1: Create a new event.
Step 2: Specify the items and item details.
Step 3: Invite suppliers.
  Then you just sit back, and watch prices tumble.

Yakko If it’s that easy, is it really an 80% solution?
Australian Accent Think about it. How much does an e-RFX and e-Auction solution really have to do?
Yakko Well, one thing we learned from talking to Source One about WhyAbe is that, for many categories, and many small to mid-size companies, it doesn’t have to do that much.
Australian Accent Precisely. And their offering is actually a good starting point to understand our offering.
Yakko So how does your offering compare to theirs?
Australian Accent Quite good. We both have the bare minimum requirements for e-RFX and e-Auction, but whereas, in our view, they’re more of a 60% to 70% solution, we add a few features that, although they sound like bells and whistles, are actually necessary for an 80% solution in today’s global e-Sourcing marketplace.
Yakko Like what?
Australian Accent Localization. Contract tracking. Fine-grained scoring on RFX questionnaires. Microsoft Excel integration. Templates. Instant-Messaging and Alerts. Customizable dashboards. Supplier Master Management. Wizards for each step of the process. The little things that make it easy, useful, and a pleasure to use — all embedded in a streamlined application with a carefully designed UI that buyers want to use.

And, unlike many other e-Sourcing platforms, it’s a low-cost, self-service, pay-as-you-go platform.

Yakko How low?
Australian Accent $39.99/month for unlimited RFIs, RFPs, RFQs, and reverse auctions. Plus, you get instant access to thousands of suppliers in the Ketera network.
Yakko Beaut!
Australian Accent Too right!
Yakko Anything else we should know?
Australian Accent It’s very easy to administrate, and the item and supplier master views support numerous filters for quick location of the appropriate item or supplier. It’s straightforward to enter proxy bids on behalf of a supplier. All of the reports have decent graphic capabilities. We support the UNSPSC schema for item categorization. And it has basic project tracking capability — you can quickly see your open events, events requiring bid evaluation, and recently evaluated events at any time.
Yakko So it really is a decent sourcing solution for small and mid-size companies just starting out on their e-Sourcing journey, or those companies without sophisticated sourcing needs.
Australian Accent We think so. And, as I said before, very easy to set-up a sourcing event.
Wakko I’m out of baloney. How long to set up an event to source a 3-months supply?
Australian Accent Five minutes. Watch.
  five minutes pass as the salesperson demos the tool
Wakko That’s it?
Australian Accent That’s it!
Wakko Fair suck of the sav!
Apparently, Wakko has his Aussie down pat! If I didn’t know better, I’d say he was from the Never Never!
Yakko Well, thanks for the demo. It certainly is an interesting take on the e-Sourcing space. A sourcing tool that every business can afford.
Australian Accent Thank you. Hooroo, Journo!
Wakko Hooroo, mate.

On the Eleventh Day of X-Mas … (Introducing Trade Extensions)

On the eleventh day of X-Mas

my blogger gave to me
another vendor hyping,
blog posts worth keeping,
l’il hampsters dancing,
thoughts for a shilling,
strategies for winning,
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Allow me to introduce you to Trade Extensions. Founded in Sweden in 2000, it offers an optimization-based negotiations platform to European clients (from Sweden and a base of operations in the UK), and now, American clients through its office in Houston, Texas.

Trade Extensions offers a self-service on-demand e-Sourcing platform that is available on a per-event basis and backed up by industry leading optimization algorithms designed by scientists with expertise in algorithms, combinatorial optimization, and micro-economics. Like many other platforms, it offers full featured e-RFX, e-Auction, and sourcing project management, but unlike the vast majority of e-Sourcing platforms on the market, optimization is embedded into the RFx bid evaluation and auctions. It’s your favorite sourcing platform on steroids.

The auctions are lot-based, and support as many items, associated attributes, and prices as you want per lot. In addition, pricing, and ranking, can support arbitrary formulas and comparisons can be made against bid logs and historical transactions. Lots are also color-coded, with yellow indicating fields that only the user sees, brown indicating historical data fields that only the user sees, and green indicating fields that the bidder sees. Example fields include name, description, bidder-entered, type, min-value, max-value, decimals, required, distance-to-bidder, and rank-displayed-to-bidder.

The underlying optimization is sufficiently sophisticated and qualifies as true strategic sourcing decision optimization, as per the requirements set forth in the wiki-paper. It supports a number of different types of constraints, called rules, that are based on filters that can act on any attribute. For example, it supports hard limit capacity rules, soft limit allocation rules, meta-allocation “chunk” rules, and composed rules that specify limits on specific lots or lot components. The rules are template-based, which permit them to be saved, copied to, and applied to any relevant scenario. The filters can work on bidders, lots, bids, plants, and lot fields, among others. Furthermore, it can support alternative bids … allowing tiered bids and certain types of matrix bids. And in addition to standard sourcing and freight optimization, the underlying platform can also support limited multi-level supply chain optimization … which is more than most platforms give you!

Analysis is flexibile and powerful, supporting as many scenarios, and comparisons between scenarios, as you like. The analysis screen also allows you to see the status of each scenario, the award volume, the lane allocation, historic costs, savings, applied rules, and solver data. Reporting is above average and allows you to create your own report templates using a plethora of fields, matrices, formulas, and reporting rules.

Now it’s not perfect, as it doesn’t yet support certain types of discounts through the UI that are occasionally useful (although I’m told the underlying model can support them), certain types of mixed freight bids (which, in reality, don’t occur that often), and the UI isn’t designed to support distribution network optimization (but hey, what tool is?), but it’s definitely a tier-1 solution, and it’s nice to see that there’s more than one company who understands that, to be truly useful to the average buyer at the average organization, strategic sourcing decision optimization needs to be powerful, embedded in an e-Sourcing platform and user-friendly. And, they are improving it every day, unlike some “competitive” applications that haven’t changed significantly in years.

Furthermore, unlike most of their competitors, it’s very affordable. They have an event-based model and an unlimited usage model. Their event-based model starts at 0.5% of the value of the tendered goods and services for a full-service event, and drops to as low as 0.3% of the value of the tendered goods and services for a pure self-service event (if multiple events are committed to). Ongoing licenses start at only 10,000 Euros / month for unlimited use (for up to 10 users). Considering that it was only a few years ago where events started at 100K and annual licenses at 50K a month for less functionality — just for optimization — and Trade Extensions’ platform also contains extensive RFX and Auction support built-in, it’s certainly worth investigating if you have optimization needs.