SaaS relationships are complex and long-lasting. Significant attention must be dedicated to defining the expected services and understanding how they will be measured. Preparing for potential changes during the life of the contract is also critical to success. Insurers will benefit from detailing exactly how service levels will be measured, how problems will be escalated, and how exiting from the agreement will be supported.
As with any relationship, the insurer should expect a strategic partnership but should negotiate the contract anticipating issues. Effective relationships are established when roles and expectations are clearly defined. The fluid nature of cloud services makes this a bit more challenging, but by focusing on the items in this checklist the objective is still obtainable.
The following three categories have been highlighted as major focuses for carriers to consider.
Outlining Scope and Responsibilities
Identifying who should participate in the selection process and establishing roles and responsibilities early is critical to a smooth and effective selection process. Decision-making authority should be clear, and any financial or technical constraints should be identified. Time spent up front will help avoid setbacks or miscommunications and encourage organizational buy-in. Insurers should always focus on presenting a unified front to the vendor.
Preparing for the Future
Defining the scope of a provider relationship is just the first part of negotiations. Insurers should recognize the long-term nature of these relationships due to the investment made and make provisions for business changes, even if they are not currently anticipating any. Understanding what would happen if the business changed dramatically helps insurers understand the base contract and position themselves for the future.
Managing the Services and Relationship
Service levels are more critical and readily defined for SaaS relationships. SLAs, escalation procedures, and incentives/penalties are required to effectively manage the vendor relationship as well as potential changes in insurer mindset, culture, or processes. Establishing the proper framework requires a significant amount of due diligence and effort on the part of both parties. Quite often, SaaS providers will be reluctant to define application performance SLAs for configurations that have not yet been established. This may require a phased approach for establishing targeted service levels.
For a more in-depth look at designing and building relationships that create desired business outcomes for all parties involved, read Novarica’s report Establishing Solution Provider Relationships: SaaS Agreements.
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