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The risks of SaaS for business-critical applications

Adoption of cloud computing has reached an inflexion point with more businesses ready to run mission-critical applications to the cloud. But businesses considering going down this route should seriously consider using SaaS escrow agreements to ensure they can keep operating if their SaaS provider were to stop trading.

According to a survey by cloud services vendor Virtustream, over two thirds of large organisations in the UK are planning to migrate their business-critical systems to the cloud by the end of 2014.

But no matter how robust the infrastructure and the service guarantees of the SaaS provider, they count for little if the service provider stops trading. The SaaS industry is still relatively young but there have been several cases of this happening. As more software vendors move to the SaaS model and more start-ups enter this market, the number of failures will inevitably increase.

That’s because the business characteristics of delivering software as a service are quite different from those of selling software products. With the product-centric model, the vendor’s on-going costs are basically people costs as the customers bears all the costs associated with running the software.

With the SaaS model, however, the service provider is responsible for ensuring the service meets strict technical requirements in areas such as security, scalability, availability and data recovery.

For service providers looking to offer business-critical applications, customers will expect a highly robust infrastructure with off-site disaster recovery strategies and so on. The on-going costs of running a mission-critical SaaS infrastructure are substantial and, unlike people costs, they cannot easily be scaled back if the provider hits a rough patch.

So, businesses looking to run mission-critical applications in the cloud should consider using a SaaS escrow service to monitor their SaaS provider’s financial performance. This will ensure that, if the worst does happen and their provider suddenly stops trading, access to the applications and data can be restored with the minimum of disruption.

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