SaaS Requires Standardization

Does anyone else remember something that resembled a programmable typewriter?

I was volunteering at a legal aid office during the summer of 1971, and one day they rolled in a workstation outfitted with an electric typewriter, an automatic paper feeder, and a box attached to the typewriter where the typist/operator plugged in different cartridges. As I recall, each cartridge would cause the typewriter to automatically type out a standard legal document, pausing at certain points to allow the typist/operator to manually key in names, addresses and other particulars.

This precursor to the Wang word processor and MultiMate on a PC was a wonderful time-saver and served the needs of the law office as they cranked out the standard "writs of this" and "appeals of that," each legal document identical, save for the names and addresses of the parties involved.

Companies selling software-as-a-service (SaaS) solutions should strive for this kind of standardization. They should aim to prepare identical legal agreements with standard terms and conditions for all customers.

Standard = Faster

For one thing, a standard agreement accelerates the sales process. Too many of us have seen opportunities proceed smoothly through most of the sales cycle, securing approvals all along the way, until they run smack dab into the folks in procurement and legal. A quick and easy sale becomes a protracted and difficult sale. One red-lined contract draft after another gets passed back and forth between the vendor and the customer, haggling over payment terms, service level agreements, activation clauses, ad nauseam. And in the SaaS model, delaying the flow of subscription revenue by weeks or months is painful. (See "Getting Deals Unstuck from Legal and Procurement.")

Changes now can cost you later

Adhering to standard contract terms also discourages customizing the application or operations for individual customers. You can build and maintain a single application that's hosted, delivered and supported via a single, standardized set of procedures. "One-offs," whereby one customer is handled differently than others, can increase costs for development, testing, deployment, support, upgrades and operations. What may look like a small change to the contract can be costly over the entire life of the customer.

Obviously, some SaaS companies need to be more flexible than others, and a single set of terms and conditions may not be practical. Large enterprises, for example, may require particular provisions to suit their specific needs for broadly deployed, critical applications.

That said, however, SaaS companies should still aim for standardization, and they should make it clear which items are negotiable and which are not.

Anything that stops the typewriter keys from clicking automatically at 150 words per minute and forces the operator to manually type in something unique can be extremely costly.