Thursday, 17 April 2014

If your SaaS product does not have an API then its not valuable

Myself and others at SystemSync Solutions Ltd have spent a lot of time recently looking at Cloud SaaS Payroll systems in the UK. And during that time we’ve also migrated our traditional accounting package (which use to sit in a server in our office) into the cloud. Our findings and experiences from these activities has lead us to understand that if a SaaS product does not have an API then it is no better than a traditional desktop software product.

Here’s why:

Firstly, there’s no financial advantage to using a cloud SaaS tool. Our old desktop accounting package used to cost me a monthly fee to license. The SaaS version is approximately the same monthly fee. 
Conclusion: in this case SaaS gives no significant financial advantage to the customer

Secondly, there’s only a small productivity advantage to using a cloud SaaS tool. True that SaaS can be accessed anywhere (such as from home) but my in-office desktop accounting package was also accessible from home via VPN. It’s also true that cloud SaaS does not require me to install new software versions. But to be honest the job of installing new software versions on desktop software is trivial and reduced to a few clicks. Most desktop software packages do a great job of updating themselves in the background. But it has to be said that one clear advantage from using a SaaS accounting package is that my accountant can access my account on a regular basis to keep my books in order. That’s good for them, but irrelevant for me. 
Conclusion: in this case SaaS gives some, but not significant, productivity advantages to the customer.

Thirdly, when it comes to security there’s no real advantage to using a cloud SaaS tool. Personally I think my companies financial software is now marginally safer then when it was stored in my office. When I moved my accounting package into the cloud I made a choice to trust my company accounts to a very large established business which I believed could be relied on. And at the same time I removed from my own business any responsibility for local security/back-up/access/password management to the server containing my accounts package. But the advantage is small. Security of my desktop accounting software was already pretty good: I know who has access to the room its in; I know who has access to the machine it sits on; I know it cannot be accessed without 2 sets of usernames/passwords which only I know. Plus in the back of my mind I know that SaaS companies store all their customers data in one place meaning if a hacker did get through then they would be able to steal thousands if not millions of companies financial data in one go. 
Conclusion: there’s no real security advantage to using Cloud SaaS.

So if there’s no clear advantage on price, security or productivity for customers of cloud SaaS then what’s left? The answer is data integration. Enabled by SaaS platform APIs.

Using Cloud SaaS tools which have APIs means I can “add on” additional functionality to my SaaS accounting platform. I can link it to other SaaS products I use like time sheets, e-invoicing platforms, e-commerce markets and so on. This helps me reduce my manual data entry tasks. And that gives me real justifiable productivity gains and the possibility to scale my business without getting slowed down by admin.

And that leads me back to my opening sentence of this blog: if a SaaS product does not have an API then its not valuable to the customer because its not helping them move their data around their business. Instead its keeping their data siloed and isolated. Which is a situation that is no better than the old desktop software equivalent. The big incumbent software houses want to move you (their customer) into the cloud so they can stop supporting multiple desktop software versions. I understand why they’d want to do that. But if those same companies don’t also provide an API into the SaaS product then their customers data is just as “locked in” as it is in desktop software.

The UK Payroll market is dominated by legacy desktop payroll software products. But there is a new breed of emerging Cloud Payroll products. But to date I have only encountered one which has an open API: PaySuite. That’s amazing. Its amazing because almost every other software market sector is dominated by SaaS products with APIs which are chaining together to provide seamless data integrations. That seamless exchange of data is eradicating the mundane office tasks meaning that businesses which are adopting Cloud SaaS tools are overnight becoming more productive and efficient (than rival businesses which are not). That means that SaaS with APIs gives competitive advantage to customers who use them. SaaS without APIs does not give any advantage.

Right now my policy on buying cloud SaaS products is “if it doesn’t have an API then I’m not interested”.