By Ron Piccioli
Selling Software-as-a-Service (SaaS) is supposed to be easy, right? After all, with SaaS everything is outsourced. Applications are housed and managed in a service provider’s data center, so your customers don’t have to worry about building the server, installing the application, configuration, or maintenance. They’re up and running quickly with the cloud, can scale and integrate easily, and upgrades and new releases are delivered seamlessly online. Plus, pricing via a subscription model means your customers only pay for what they need with SaaS.
Yet, with the emergence of the SaaS model and its myriad benefits, enterprises need to carefully vet the SaaS providers they choose. The cloud is now giving birth to more than eight out of every 10 new software applications, yet 79 percent of SaaS providers do not guarantee application continuity to their subscribers, according to research by FierceCFO Everest Group Research.
This rush to create new SaaS applications without a guarantee of application continuity creates a trust issue. Why should a client trust you with their applications and data—especially if your business is new, small, or unproven? Often, small SaaS providers can’t answer the “What if your servers go down?” question, much less the bigger, “What if you close your doors, how do I continue and get my data?” In essence, you need to earn the trust of your subscribers by having answers to the tough questions. This lets you deliver all of the benefits that the SaaS model enables.
To understand the perspective of enterprise companies who evaluate and buy SaaS applications, Iron Mountain conducted a survey of IT executives via IDG Research Services. The research reveals that while SaaS adoption is high, there are relevant reasons to worry about risks—and to have a contingency plan. This article shares some of the highlights of that research, as well as how SaaS developers can help establish the trust to overcome obstacles.
More SaaS Please!
SaaS has more than doubled in the last seven years. In a similar 2008 survey, IT leaders reported that on average 11 percent of their organizations’ applications were deployed in the cloud, while 79 percent were on-premises software. Today, SaaS has risen to 25 percent of the average applications portfolio, while on-premises software has dropped to 67 percent.
What’s more, this trajectory shows no signs of stopping. More than one-third of the respondents plan to adopt more SaaS applications and services over the next 18 months.
Statistics from Gartner support these results. The market analyst firm states that the enterprise application software market is driven by cloud-based SaaS offerings and is growing at 7.5 percent. Worldwide spending will soon reach $150 billion in annual revenues, and is predicted to exceed $200 billion in 2019.
Subscriber Concerns about Access to Critical Apps and Data
Despite their eagerness to adopt SaaS, half of the IT leaders in the survey say they consider it more risky than on-premises software when it comes to mission-critical applications.
The majority of concerns were in relation to access to essential applications and data; 73 percent of respondents said it’s “very important” or “critical” that a SaaS provider allow continued access to applications and data, even if the provider goes out of business. Well over half of the respondents also say they’re willing to pay a flat fee for a contingency plan that ensures business continuity for mission-critical SaaS applications. The larger the organization, the higher the fee it’s willing to pay.
Outages and data mobility are two often cited concerns in regard to SaaS. Despite disaster recovery plans, outages do happen with SaaS and causes range from natural disasters to hacking, server crashes, and bugs. Outage of a mission-critical application could prove disastrous, so it’s important to assure your customers with well-written Service Level Agreements (SLAs) and a plan for application continuity. Data is also treated very differently with SaaS. Since it resides in the cloud along with the application, your customers lose access to their data, as well as their application, if there is a problem with their SaaS provider. Your customers need assurances—they need to know what will happen to their applications and their data if something happens to your business.
Past Experience with SaaS Vendors
The IDG survey shows that enterprises have legitimate reasons to be concerned. One in three organizations surveyed had licensed million-critical SaaS applications from vendors who ultimately did not meet expectations for application support. In most of these cases, respondents reported that their organizations terminated the vendor relationship. Several also sought legal recourse.
As a SaaS developer and provider, how can you provide your customers with contingency plans to mitigate SaaS risks before it’s too late?
It’s important to note that your disaster recovery (DR) strategies—while critically important to establish—will not address all the risks your customers face. Your customers are concerned about the application and data when you are not there. Your DR plan is just that “yours”—you need to address the real question around what happens if you were to disappear? In addition, they will need a business continuity strategy that works in any situation not addressed by your DR strategy. This means that you should be able to provide subscribers with access to applications and data to “keep the lights on” in case you can no longer provide support.
This type of contingency plan needs to ensure short-term access to the application and data—whether by hosting the application in their own data center or in a private cloud—until they can transition to another SaaS provider. Of course, you have every confidence that your business will be operational and able to support your customers in the future, but acknowledging customer apprehensiveness and creating a plan for contingencies will help you overcome the trust issues they may have.
Three Keys to an Application Continuity Plan
Ideally, a contingency plan should rely on an independent third party that can provide independent access for your customers to their data—even if your business ceases to operate; name your customer as a beneficiary to their data, and enable continued use of the application; and allow continued use of the SaaS applications for an extended time while they identify replacement options if necessary.
In the volatile and still-growing SaaS market, enterprise companies must be prepared for the possibility that their SaaS provider might go out of business, merge with another company, get acquired, or otherwise stop supporting their mission-critical applications.
SaaS providers must concede that these risks exist and offer options for risk mitigation in the form of an application continuity plan implemented with a neutral, independent third party.
To download the full IDG research paper When the Cloud Evaporates, please visit http://bit.ly/1M6pJi4. SW
Ron Piccioli is a director for Iron Mountain’s Intellectual Property Management business. He and his team help software developers protect their intellectual property assets and lower the obstacles of selling both on premises and SaaS software. Learn more at ironmountain.com/ipm.
Nov2015, Software Magazine