January 6th, 2009
SaaS vendors face FUD wars over viability
What will happen to your data if your software as a service vendor goes belly-up? That question is becoming more relevant as the economic downturn progresses.
Enterprise Irregular Vinnie Mirchandani sums up that question well and happens to note that traditional on-premise software vendors are bringing the issue up a lot. No surprise there given that a little fear uncertainty and doubt can go a long way.
Vinnie explains:
This year, a new FUD - that of viability in a recession - will show up as another concern around SaaS. I am hearing comments such as “at least with on-premise, vendors used to put their code in escrow”. Forget that I have rarely seen a customer battle to get such code out of an escrow bank, the concern with SaaS is that option is not available at all.
Vinnie’s cure for this anti-SaaS campaign is relatively simple. SaaS vendors should go on offense show customers how they can extract their data if they want to leave, provide back-up arrangements, require any acquirer to support service for at least five years and open up the books for examination.
Those suggestions are all valid, but I doubt a lot of newly minted SaaS vendors are going to follow through. Is a SaaS vendor–or any other provider for that matter–really going to talk bank covenants with customers?
As a result, the SaaS sector is likely to look like the rest of the software industry–the big companies will benefit in a downturn. Simply put, you’ll buy from a company you know can take a punch. In SaaS, that means Salesforce.com can take more share. Smaller fish may have to show their bank accounts to skittish CIOs.Also see:
- Migrating to Amazon Web Services: The blueprint
- Software as a service: It should be the best of times, but it isn’t
- Debunking myths about the SaaS partner channel
- SaaS and the renewal question
- Back up your online data. Now.
- Phil Wainewright’s SaaS blog.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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