In today’s fast-paced business environment, offering industry-specific cloud solutions with AI is no longer enough to stand out. The high cost of implementation can often deter customers from fully embracing cloud adoption.
By reducing these implementation costs, software vendors can gain a significant competitive edge, helping customers unlock the true potential of SaaS and ensuring long-term loyalty, thereby maximizing the software's lifetime value.
Having worked in software companies that delivered industry solutions on a common horizontal platform for all sizes to purpose-built embedded industry solutions, there are pros and cons for both approaches.
Pick the software that matches your industry, and business processes while accounting for growth between SMB, mid-market, and large enterprise software solutions. Most mid-market and enterprise solutions offer extensible platforms like Salesforce, Oracle, SAP, and Infor.
Here are some eight strategies to reduce SaaS implementation costs and build a long-term relationship —starting even before the contract is signed.
1. Prioritize Core Functionality Over Comprehensive Features
Not all SaaS solutions are created equal, and including every possible feature is not always necessary. Focus on ensuring that the solution covers essential, industry-specific functions and is intuitive for end-users.
This is something I have learned through my career with where industry core functionality is embedded into the product reducing the cost during implementation.
Impact: By concentrating on core functionality, companies can save time and resources, leading to faster time-to-value for the software investment.
2. Leverage Cloud-Based, Extensible Solutions
Cloud platforms generally have lower upfront costs compared to on-premise systems. With low-code/no-code capabilities in the platform, they enable easy extension of core applications using automation and AI, while allowing seamless integration with other top-tier solutions.
Companies that are born in the cloud or cloud-first focused on delivering on the promise.
Impact: Reduced initial investment, faster time to market, lower ongoing costs for maintenance and staffing, and easier adherence to the 1-2x ARR budget.
3. Engage in Vendor Negotiations
Once a vendor is selected, negotiate pricing, services, and contract terms. Vendors are often willing to adjust implementation costs, offer payment plans tied to ARR growth, and provide flexible options for training and support.
Impact: Securing favorable pricing and payment structures aligns implementation costs with growth, fostering a long-term partnership with the vendor.
4. Adopt a Phased, Modular Implementation Approach
Break down the implementation into phases, focusing on mission-critical components first. Deploying in stages allows businesses to delay costs for advanced features until sufficient ARR growth is achieved.
I have talked to a number of customers that start large implementation projects and doing in stages is where they can show incremental success.
This has allowed our customers to show success that allows them to then get additional budgets to deploy additional functionality.
Impact: This approach spreads out costs over time, ensuring each phase delivers measurable business value before moving to the next. This avoids the upfront cost of a big bang approach and also allows for a mutually beneficial relationship with the vendor
5. Assemble a Core Stakeholder Team from Each Department
Create a cross-functional team from the start of the implementation process. This team should be involved in vendor selection, implementation, and user training, ensuring smooth collaboration across departments.
This is something I have advocated to our customers especially when using implementation partners, and ensure governance of the entire project.
Impact: Effective governance keeps implementation costs within the 1-2x ARR range.
6. Opt for Configuration Over Customization
Stick to out-of-the-box functionality, making only necessary configuration changes. Ensure the product demonstrated during the sales cycle is what’s being delivered, so updates won’t surprise end users.
Here it is extremely important to work closely with the product team from the software vendor so you are using the right functionality at the right time for the right role. Product Teams are always available to guide you and share their roadmaps, so use them effectively.
Impact: Staying aligned with the vendor’s software updates ensures seamless uptake of new features, avoiding additional costs.
7. Use an Experienced SaaS Implementation Partner
Partner with a SaaS implementation firm that understands cloud-based solutions. Skilled partners can streamline the process, minimize customizations, and ensure that the internal team stays aligned with the software’s capabilities.
There are specialized implementation partners for industry/product, working with your software vendor to find the right implementation partner for your needs.
In my extensive career, as product leaders, we want successful outcomes for our customers and partners and I have worked with some of the largest telco and financial services customers to ensure each of us is focused on the customers' success.
Impact: An experienced partner helps ensure successful outcomes with minimal disruption to the vendor relationship.
8. Invest in Early User Training and Change Management
One common implementation pitfall is waiting until the end to train users. Involve end-users from the start to prevent mistrust and resistance.
Early investment in training and change management minimizes post-implementation issues, including working directly with the software on any new user functionality being released and providing continuous feedback.
Impact: Well-prepared users are more efficient, make fewer errors, and require less post-launch support, becoming champions of the new system.
Final Thoughts
Keeping implementation costs within the 1-2x ARR range requires a disciplined approach. By leveraging the right technology, adopting a phased deployment, and staying as close as possible to out-of-the-box features, companies can reduce manual tasks and empower users to focus on running the business.
Being a product leader, my biggest ask is to be aligned with the software vendor and be the voice that provides continuous feedback - good and bad so you are part of the strategic customer council.
These strategies create a balance between cost and functionality, maximizing ROI for both customers and vendors while fostering long-term relationships.
About the Author
Uma Welingkar
Chief Product Officer
Uma is a strategic product leader with extensive experience in driving innovation, leading global teams, and delivering customer-focused solutions.
Read her story.
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