Is SaaS software good for small startups?

Jane Levin's Profile

We are looking for something more scalable and global than Quickbooks, but we are small (sub 50 employees) and I don't think I want to take a $50K+ proposal to my CEO for a system we currently pay ~$1k/year for (QB). Are there inexpensive SaaS solutions out there and what do they run on a per user per month basis? Thanks!

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Hi Jane,

Without knowing a whole lot about your company and your ERP requirements; there are a number of cost effective SaaS solutions out on the market today. I've seen some solutions with a low start-up cost and a monthly subscription fee per user of around $150 per month per user. Make sure that you factor in technical support in your numbers as this is where a number of SaaS providers will get you.

As an example, I've provided a link below of a service provider that offers Microsoft Dynamics via cloud computing and the various modules that are included with their manufacturing package.

http://www.mygpcloud.com/Information/AM.aspx

Just keep in mind that as you go through the researh for a Saas service provider there are a number of pro's and con's with going this route and you need to decide whether or not the pro's (i.e., no additional hardware required) outweigh the con's (i.e., tied to the vendor's upgrade schedule) for your business.

Let me know if I can be of further assistance.

Good luck!!
Pete

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Jane,

Pete had a good idea.

Not sure which version QB you use.... But, also, do not overlook QuickBooks Enterprise v10 or v11. It is robust, great for remote or on-site entry and reporting. It now has off-site backup and technical support. Easy to access from anywhere.

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I agree with Peter's comments on pricing. I have used Intacct and NetSuite at clients and employers for many years.

The pricing for these system range from $150 to $250 per month per user, depending on your needs. You can manage costs by limiting the number of "full access users" as opposed to those who only need read only access.

I find that the key benefits of using a SAAS provider that has built their program from the ground up for the web (very important point) are the following:

1. Less upfront cost and no need to deal with annual maintenance fees (std. 20%)

2. Stability of system and no need to deal with upgrades, backups or reliance on servers/IT department

3. Ease of integration with other systems and ability to customize and flexibile reporting capabilities; again because they are optimized for the web. Also, you can easily have the software linked up with databases, websites, etc.

4. Minimal training costs - if you are an accountant, you can get it pretty quickly. You can limit the views of users to make it easier for the non-accountant types (e.g. dashboard, reporting only, etc.)

5. Little or no tech support costs - built into the monthly fee with software and/or 3rd party provider.

6. Scalability. On the surface, with a major SAAS ("cloud-based" system, it might feel overkill for a startup. However, getting a system in place at the get go, which can grow with you to several hundred million dollars, I my mind is the way to proceed. As you scale, you simply add the people and special modules that you need (e.g. multi-currency, global consolidation, etc.)

I don't mean to bash QuickBooks, but I have found over the years that the system (whatever version) becomes unstable after data builds within it and/or you have multiple users banging on it. Trading backup files is cumbersome and frought with errors/risks. Their online version is just not robust enough for any decent size company.

I'm happy to discuss specific experiences in more detail to whomever is interested, as you can see I am a strong advocate of SAAS. Thanks. -Paul

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I re-read the original posting, but don't have a clear view of what you need/want. More important, I have no idea what industry niche you're in or what the specific application needs are. I was once told "a problem well defined is half solved". I believe it.

Are you a manufacturer? Do you need Cost Accounting with incremental value added to the cost for labor and/or outside processes? Or are you just a retail distribution or POS application? Or do you need something else?

You say there's 50 employees, but just how many actually get to use the software directly each day and what do they do to/with the data? Does EVERYONE get a "seat" at the keyboard?

For the record, QB in any version IS NOT a good idea for a real fabricator or manufacturer. Even the 3rd party add-on Fishbowl packages are somewhat wanting in terms of Cost Accounting and and value added inventory accounting. Incidentally, most all systems "become unstable" as more data is input and more users added, particularly if there's loose disciplines as to the types and quality of input, and the education of the users.

There's no substitute for defining the processes for input, training the users and then following up to guarantee they're doing it right. No new system implementation is the "silver bullet" that ever solves user discipline issues. Anyone that tells you to do both concurrently is being paid hourly to "help you".

You need process documentation, training and discipline first, all the time and every day. Then you have a fighting chance of making a new system work.

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When it comes to multitenant or shared framework apps, like NetSuite, Intacct, and others... my concerns relate to the long-term usefulness for the smaller businesses. Small businesses, especially, are virtually guaranteed to make at least one additional software purchasing decision in the business lifecycle. Given this likely reality, investing the business and (more importantly) the data, in a proprietary or difficult to extract data format (and lacking the business logic once extracted) may not be the best direction. If information is power, losing the "intelligence" earned in the early years isn't helpful to the business. Once the organization is more mature - in terms of processes and operations, then a multitenant cloud app may make more sense. I'm a big fan of app hosting, because it is a "tweener" approach that helps businesses bridge their processes to cloud apps without having to lose the initial investments in software, training, data, etc. Make sense?
J

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I have spent over two decades working with Commercial Off The Shelf (COTS) software, as we once called it, ERP and business software, both on-site and hosted and SaaS -- as long as you understand what you need and what you will be getting at what price, you can do considerably well with a SaaS solution as a start-up.

Off-loading the IT hardware and software maintenance and the disaster/error recovery advantages of a cloud solution are powerful benefits. Just as COTS and ERP buyers did in the past, you need to control the urge to customize.

1.) Understand requirements (near and medium term); 2.) Understand what the market is really offering (not selling) today; 3.) Establish a business case and plan; and, 4.) Be ready to deal with a few points of compromise -- you can be focused better on delivering your business objectives the sooner you have your systems and related process in good order.

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I've seen the prior comments about SaaS and Cloud offerings, and depending on your business size, $150/user/month is not cheap in my opinion. That is $$1800 annually for a single user. At some point, the ROI doesn't make 100% sense vs a traditional software model (Granted that one might be able to negotiate a better deal).

As has been said, each case needs to be explored; and if it is a fit then it is a best choice, but to focus only on one technology is always myopic and fraught with dangers.

As for Quickbooks, it is not a panacea for all businesses. Granted it is low cost, but not all business run the way QB works, and depending on business model and transactional volume it can cause more harm than good.

See previous statement about myopia.

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Totally agree. I think most folks need to start with a needs assessment, and then look for solutions that meet your needs. This "my needs first" approach tends to weed out the marketing effect of shiny new platforms as well as tried and true. If a solution has what you need, based on your own internal assessment, that's a great place to start. If it doesn't, then whether it's big or small, SaaS or on-premise, doesn't matter at all.

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Try looking at kashoo and xero. We are using xero and loving it.

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Maybe the bigger question is "Is my company ready to go to the next level"? The bottom line, and this is true regardless of whether the system is cloud based or "traditional", is that your organization as a whole must be prepared to adopt to the new system. Today's systems are built (and for most, priced) to extend far beyond the finance department (hence the term "enterprise"). The other silos of the organization need to be on board and willing to change the way they do things in order to ensure the success of the new system and in the long run, benefit by the tools and information it will provide them with. If they are not, invest your time and money in other areas of the business.

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There are many a traditional server based accounting system that is enterprise based.

Just because the software runs in the Cloud and is SaaS doesn't make the software (fill in the blank, but examples might be good, the right fit, cost effective, secure, bug free, etc.).

Just because a vendor states that they have complied with all the tenants of an ISO, doesn't mean the vendor is not prone for, or can have all the problems that are inherent in every computer install (privacy, hacking, etc). To assume that you have zero risk is an incorrect assumption.

The Cloud may have some unique advantages, but like Quickbooks it is not for everyone and to assume that you can't "get to the next level" (personally, I hate that phrase, but I digress) is presumptuous at best.

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Please take a look at my comment:
"this is true regardless of whether the system is cloud based or "traditional".

It was not my intent to imply that you can only get to the next level, i.e., increase the functionality of your system, by moving to the cloud. I'm simply saying that if you are moving to a more sophisticated system with increased functionality the organization must be willing to embrace it. I hope that makes more sense.

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While it does clarify the "move to the next level" aspect of your posting, I still must disagree with "all or nothing" aspect of using the Cloud.

Believe it or not, Social Media, the Cloud and the Internet has not; to the nth degree, permeated the business-world; completely. Case in point is your e-mail address Gary.

Yes, you have one. But you are using your ISP's domain name. You haven't branded yourself (or your company) and as such you are not using the power inherent in the Internet to move (using your phrase) to the next level.

Just as you have decided for whatever reason not to get a unique domain name, stating that you "must be willing to embrace" anything is incorrect, when there are systems that abound that can duplicate or probably a more appropriate statement; perform the needed services that are not the Cloud. Again, your e-mail address gets the job done.

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Are you looking to process transactions, or produce actionable information? Too many companies minimize investments in finance, accounting and information in the early stages of the business life cycle, because owners/operators and CEOs do not understand the value or return on those investments.
Rather than looking for an inexpensive alternative for your needs, I suggest you search for the solution you feel is the best fit long term for your organization. You will be held responsible for what you chose, whether cheap or expensive. Develop a vision for the robust information producer you want, including interim metrics before you start evaluating options. Once you have identified the “best fit,” challenge the vendor to provide a financially appealing proposal.
Some vendor offer financing, some do not. Yes, hardware financing is an added issue, but financing is possible. More providers than you think offer SaaS, or cloud based options in addition to their traditional versions. Making a commitment to use a SaaS version of the long term solution minimizes the conversion cost of transitioning to an in-house based version later when you feel the organization can afford those costs.
Ultimately, your challenge should be producing a persuasive cost/benefit analysis to convince the CEO to implement the right solution, which is far less risky to the organization and your career, as well as less time consuming than trying to make a cheap alternative work in the interim. I suggest you:
1. Develop a “blue sky” vision for output capabilities you want to provide stakeholders (the ultimate benefits).
2. Invest time in identifying the most appropriate solution (SaaS/Cloud based or internally hosted).
3. Evaluate all of the options from a cost/cash flow perspective for implementing your desired solution. (Note: Keep an open mind and be flexible with the schedule. Consider a rolling implementation, where you convert what you are doing today to a solution that improves processing speed, organizational flexibility or reporting, then implement additional modules as time and cash allow. DO NOT box yourself into an all or nothing approach.)
4. Develop a five year information plan.
5. Forecast company growth and develop an implementation justification argument based upon needs and cash availability.
6. Prepare a convincing analysis of what you honestly believe should be done and include options.
7. Schedule a meeting with the CEO and sell your ideas. You are not responsible for the final decision, but you are responsible for insuring the CEO has all of the information they need to make the right decisions. While you may not leave the meeting with the answer you want, you should leave with a plan knowing that the CEO clearly understands all alternative and the consequences related to each.

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