The Risks of SaaS (Software as a Service)

Google decides to teach its users about vendor risk the hard way...

It looks like reality is finally destroying some of the software developers’ Utopia that was Google.

Along with the recently announced layoffs, we learn that a number of Google services are being axed, including Google Video.

It’s a reminder that a significant risk of Software as a Service (SaaS) is supplier viability.

While reliability may be an issue (for example, has had some well publicized outages), it’s important remember that a SaaS supplier’s reliability must be compared with the potential reliability of services from the company’s own in-house IT department. Often it is simply be too costly to provide the same degree of availability, support, and redundancy that a SaaS supplier could provide.

However, loss of a SaaS supplier is a more serious risk. If a software supplier fails, you can protect yourself with a software escrow agreement and continue as usual until software or hardware changes force the application to be replaced.

But if a SaaS vendor fails, even if you had a software escrow agreement and kept your own backups, could you replicate the necessary features of their data center in the necessary amount of time?

It is supplier viability as much as supplier reliability that is the risk with using Software as a Service.

Better check their books as well as their business continuity plan.

2 February 2009

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