SaaS market is getting its pace and a number of vendors are reaching out to the Cloud and launching software services. As the time and effort required to go to market is less compared to enterprise software, the numbers are high and some of the offerings may not be SaaS at all.
SaaS providers with limited exposure to domain, software services etc. may exit quickly if there is a delay in break even or even be forced to exit due to stiff competition.
While evaluating SaaS tools, try to verify the following aspects without fail :

Trial Sign Up
Are you able to check the features, sign up for a free trial and get the feel of the application?
If not, make sure that the vendor is confident of the offering.

Transparency in Pricing
Does the vendor reveal the pricing on the website with clear terms? This ensures that the vendor is comfortable with the market and consistent of the offering.

Terms of Service
Does the vendor publishes terms of service, explicitly in the SaaS portal? If the answer is no, quit from the portal, immediately.

Support/Help Desk
Verify physical contact address of the vendor by making a call to the telephone number given or some other means. Can you log service tickets online and track its status? If not, issue resolution is going to be a tedious activity for you.

Can you switch from a trial/ free account to regular account? Can you subscribe/stop certain features, increase number of users, change the mode of payment etc. on the go. If not, overall effort and dependencies on vendor could be high.

Configuration & Customization
Most of the SaaS vendors package the offering with standard features, which could be enabled or disabled or in other words - configurable.However, being a customer, you may require a feature to be customized. If the vendor has no bandwidth or technology to take this up, you may land in the soup.

Data Compatibility
Does the vendor allow customer to import data to tool and export data outside. If not, there is a big chance of vendor lock- in and it is a high risk

Data Integration
Most of the SaaS vendors could be focused in relatively smaller domains and this could make customer to subscribe different tools for various solutions. At the same time, you may require data integration between certain mission critical tools. Does the vendor provide APIs to achieve integration?

Data Security
Review all security aspects of the SaaS service including application as well as data centre. Mostly data centre are of third party. Verify the data centre credentials and particulars.

Stability of the Business
Check the background, experience and visibility of the organization behind the SaaS. It could be extremely risky to depend on a completely new entrant in the market for a business critical application.

Administration Rights
Once you adopt to the environment of the tool, you may like to create more users with specific rights and use the system, conveniently. If the software service is mature, you can expect these facilities from it.

Reports & Analytics
Verify reports and check whether there is provision to make user defined reports.

Track & Monitor
Can you monitor the usage - number of users, bandwidth etc. Can you track billing, amount paid, pending etc. Can you find audit log of the system? These are critical evaluation parameters of a mature SaaS application.

Service Level Agreements
Anybody can publish certain clauses as SLAs. However verify whether the vendor really follows the SLAs published. Also while following SLAs, do they follow process standards? You should not be at the mercy of a vendor.

Social Proof
Check for testimonials/case studies, if available and speak to those customers and collect their feedback.Ask for specific customer references to vendor, if you are specifically looking in a particular business or that of a geographical area.

Contributed by Sreekumar J