• Legal Escrow & Arbitration Services Ltd.

    Escrow news

Take the financial risk out of cloud computing with SaaS escrow

Take the financial risk out of cloud computing with SaaS escrow

What happens if your SaaS provider stops trading? It’s a question that companies often forget to ask even if they are used to grilling providers about SLAs, data protection, regulatory issues, and disaster recovery plans.

But the issue of vendor viability is perhaps one of the most significant business risks associated with SaaS. The cost in lost revenues of not being able to access key business applications or customer data for even a short period of time could seriously jeopardise the financial health of a business.

SaaS is a young and dynamic industry which means, inevitably, there will be casualties. If a SaaS provider does goes out of business there’s no guarantee that its customers will be given advance notice that the end is nigh.

Even if the SaaS provider seems dependable and solid, the hosting provider that actually hosts the service may run into serious problems of its own.

2e2

Last year, UK managed services provider 2E2 lurched into administration leaving many big-name customers high and dry.

Clauses in their contracts designed to protect them from service disruption and business failure didn’t count for much. Indeed, some were reportedly told that they would each have to pay up to £40,000 to keep the data centre running until the hosted services could be transitioned to another provider.

The collapse of 2e2 shows that even if customers believe they are contractually protected from IT suppliers going bankrupt, they may still face a protracted battle to gain access to their data.

With hindsight, pundits say that the flaws in 2E2’s business model were plainly visible. But as many of 2E2’s customers apparently failed to spot warning signs, it’s clear that few businesses are geared up to performing the type of due diligence that SaaS requires.

One of the key benefits of using a specialist SaaS escrow service such as LE&AS is that not only are data and intellectual property protected in the event of the failure of the SaaS or hosting provider, but that the escrow firm also takes care of monitoring the financial stability of the provider, and can thus give prior warning of impending possible failure.

Share it now!
This entry was posted in SAAS Escrow and tagged , . Bookmark the permalink.