Gary Levine - Talking with hundreds of companies over the past year about our stock plan and corporate governance applications, we've seen the "tectonic shift" that some analysts have referred to with regard to the acceptance of SaaS applications in the business application market. Even Bill Gates has referred to it as a "sea change" that has arrived and the Microsoft Chief Software Architect, Ray Ozzie, has been pushing it as inevitable. Perhaps the change in attitude started with Salesforce.com and Google Apps, with a slight nudge from Youtube, Facebook, and Craig's List, but it has clearly arrived. Having watched the change in attitudes and acceptance from real buyers between the beginning of 2007 and today, I wondered what has accounted for the shift in the acceptance of online applications by somewhat conservative business, financial and legal executives who are generally not technology "early adopters."
The primary impetus is that most internal IT executives, the ones that need to make the decision on whether to sign off on a new SaaS application, now are proponents of hosted applications and agree that in most cases SaaS applications have as good or better systems infrastructure as they could provide for their own internally installed applications. But, what is the cause of their shift in attitudes between 2006 and 2007? Infrastructure improvements.
First, the bar has been raised for the standard offerings from the top hosting providers that now offer a level of reliability, redundancy, security, and data backup that is difficult for a single company to match. Second, the bar has been raised for software application providers so that every enterprise level business application must offer an infrastructure that is properly configured, tested and hosted at a leading hosting provider. There is no longer any excuse for downtime from a SaaS provider of mission critical business applications. Whether you are Salesforce.com, RIM Blackberry, or Two Step Software, customers expect the same standard for service level agreements and zero downtime. Not to say it can't happen despite the highest levels of technology diligence, as we have experienced from almost every one of Two Step's SaaS providers, but every step should be taken to reduce the risk.
There are five basic areas to think about when looking at a SaaS provider:
- Security: Physical on-premise security; personnel selection; user authentication; and preventing unauthorized access
- Redundancy: power supplies; internet access; hardware, and failover systems
- Monitoring: 24/7 application, server, network, and user access
- Back Up: Daily and intermittent on-site and off-site backups
- Getting Your Data: Retrieval of data when service ends
For instance, at Two Step Software, we use one of the nation's leading managed hosting providers that offers a zero downtime guarantee and provides a level of physical, operational, and system security that would be difficult for any business to match. (see: http://www.twostep.com/solutions/install_options.asp) It's like your own systems, on steroids with redundant internet access, back-up power supplies, physical and online access security, redundant hardware as well as back up inventory, 24/7 monitoring, and daily data backups.
We believe that once you find an application that satisfies your business requirements, you shouldn't have to worry about the application hosting infrastructure. Let your SaaS provider focus on the details of delivering a reliable and high performance infrastructure so you can focus on your business needs. Although you can't take a walk through your SaaS vendor's hosting location, look for a SaaS provider with an excellent reputation and one that offers a technical infrastructure that you feel is superior to your own. Then, rest easy.