November 11, 2019

7 Hidden Costs of a “Pseudo-SaaS” AMS

7 Hidden Costs of a “Pseudo-SaaS” AMS

When shopping for an AMS, you take some things for granted. You might assume they’re all Software-as-a-Service (SaaS), that is cloud-based software licensed on a subscription basis. But there’s more to SaaS than that simple definition and that’s where assumptions can trip you up. Some of the AMS on your list may not be real SaaS at all. Instead, they’re what we call “pseudo-SaaS.”

The difference between real SaaS and pseudo-SaaS

SaaS is sometimes called “off-the-shelf” or “out-of-the-box” software. Real SaaS clients each have their own database structure but access the same codebase or core code as other clients. This is a key point to remember: all clients use the same codebase.

SaaS developers purposely develop code that’s flexible enough to give the market what it needs. The metaphorical software “box” is large enough for most requirements, and any unique needs and complexity are handled through configuration settings.

Configurations are modifications made to the software without changing the core code, for example, renaming or adding fields to a record, or creating new membership types and tiers. In last week’s post, we dove deep into configuration, including the benefits of configuration versus the perils of customization.

Pseudo-SaaS, on the other hand, requires AMS developers to “branch off” the core code to create a new customized version of the software for you. They may not market the software as customized, in fact, they may even say it’s configurable. But the truth is, they’re messing with the core code, and whenever that happens, you’re talking about customization, not configuration.

7 hidden costs of a pseudo-SaaS AMS

Customized software, no matter its label, has costs. An obvious one is the higher price tag. To develop, test, and support dozens or hundreds of customized codebases, a pseudo-SaaS AMS company needs more staff and contractors than a true SaaS AMS company. Guess who pays for all that?

With true SaaS, you can expect cost predictability and transparency. However, with pseudo-SaaS, some costs aren’t apparent until it’s too late.

#1: Platform licensing fee. If your database is built upon a proprietary platform like Salesforce or Microsoft, your AMS vendor must pay the platform up to 35% of their revenue. But since they pass that cost along to the client, you essentially pay for two licenses. Your initial licensing may be heavily discounted to get you on board, but you’ll likely pay more later.

#2: User licensing fees. Because these vendors require a licensing fee for every user, many associations limit the number of staff who can use the AMS. As a workaround, users might share logins—a dangerous security practice.

Since staff can’t easily access the data they need, they end up relying on someone else to pull it for them. If they become impatient, rogue databases, like Excel spreadsheets, sprout up across the organization. The AMS becomes the system of record in name only as data integrity plummets.

#3: Upgrades. Customized code kicks you off the upgrade path. If you’re the only client using your version of the software’s codebase—due to customizations, whether they’re called that or not—you’ll pay for upgrades. Someone has to cover the costs of the vendor’s staff developing and testing upgrades to your customized code. Or, you’ll have to pay a consultant to do this work for you before you can apply the upgrade.

#4: Integrated apps. Don’t get too excited by app possibilities. You’ll have to pay to integrate any third-party apps in the platform’s ecosystem.

#5: Reports. How are your SQL (Structured Query Language) skills? You’ll need them to create reports in many systems. If you don’t have the expertise, you’ll have to pay a consultant to create reports, or rely on your overtaxed IT person’s ancient SQL skills. If you need to develop customized reports, expect to pay the vendor anywhere between $1,500 to $3,000 for each one.

#6: Storage. Many AMS vendors consider additional storage an upgrade and charge extra for it. If you need to increase the number of records or amount of data in your AMS, your costs will increase.

On the other hand, true SaaS is scalable. As your association’s storage and performance needs increase, the infrastructure can handle it—and the price doesn’t change.

#7: Missed opportunities for innovation. When developers stay busy creating and maintaining dozens of customized codebases, they don’t have time to think about R&D or innovation. Software upgrades are less frequent, and usually you have to pay for them. Their development cycle doesn’t allow them to be that agile, and so neither is your AMS—and any processes, projects, and programs that rely on your AMS.

An AMS team that provides real SaaS, like MemberSuite, only has to design, develop, and support one codebase. We can be more agile and respond more quickly to client needs. Our economies of scale allow us to regularly deliver new features and functionality without nickel-and-diming our clients.

Our AMS Buyer’s Guide dives deeper into the differences between true and pseudo-SaaS, and how an AMS designed as true SaaS delivers more benefits to associations and membership organizations.