We use cookies and other similar technologies (Cookies) to enhance your experience and to provide you with relevant content and ads. By using our website, you are agreeing to the use of Cookies. You can change your settings at any time. Cookie Policy.

SaaS Grows Up

Editor's Note: Learn more about effective SOA Governance in ebizQ's upcoming SOA Governance Virtual Conference.



Have you considered SaaS from a standpoint of legal and business practicalities? By using a SaaS solution, you effectively outsource part of your IT and in some cases, business processes, which were previously managed internally. This raises a number of points that require consideration and also changes many aspects of the buying cycle compared to the purchase of installed on premise software. In this article we will take a look at several of these aspects including:

  • Service Level Agreements
  • Escrow
  • Business Continuity
  • Relationship with IT
  • Privacy

Service Level Agreements

It seems natural to define the terms of service, and with that to also define expectations of service availability. In some cases, customers seek to codify these expectations into service level agreements with penalties in place for non-conformance.

It is difficult however, to agree to the terms of a penalty clause that constitute proportional compensation for loss of service absorbed as a business risk by the vendor.

It is misleading to compare the practice of penalty clauses in large outsourcing contracts, since their vastly larger scope and size enables realistic penalties to be absorbed. Also, there is typically a bonus structure which offsets the penalty structure upon over-performance. SaaS contracts may be only $20-50 per user per month, and this simply does not provide sufficient margin to hedge against a reasonable penalty clause.

The best approach is to review the vendors’ track record of availability. Also, the customer should always have a back-up plan to migrate to an alternate vendor or solution, should the service provided not be acceptable.

Escrow

It is common for enterprise software purchases to include an agreement to place source code in escrow, released only in the event of the vendor discontinuing operations. The purpose is to prevent a customer being orphaned if a vendor meets its demise.

Even in the enterprise software space, while common, these Escrow accounts have a number of problems. From the vendor’s perspective, they are in effect writing an insurance policy for that by definition the vendor will not see enforced. The more serious problem is that, until the vendor is insolvent, and the source code is released, a customer has no way of knowing if every important portion of the code has been included and is up to date.

-1-

1  2  3  4  

   Next Page

Explore Our Topics

  • EDITOR'S BRIEFING
  • Virtual Conferences
  • Webinars
  • Roundtables

BPM in Action

March 10, 2011

The sixth annual BPM in Action 2011 Virtual Conference will explore cutting-edge market developments in BPM and describe how to leverage them for improved business operation and performance. More

View All Virtual Conferences

Smart Case Management: Why It's So Smart.

Date:Nov 05, 2009
Time:12:00 PM ET- (17:00 GMT)

REGISTER TODAY!

Date:Oct 29, 2009
Time:15:00 PM ET- (19:00 GMT)

REGISTER TODAY!
View All Roundtables
  • Research Library
  • Podcasts
  • News

Joe McKendrick: Part II of II: Designing Evolve-ability into SOA and IT Systems

In part two of Joe McKendrick's recent podcast with Miko Matsumura, chief strategist for Software AG, they talk about how SOA and IT systems need to change and grow and adapt with the organization around it.

Listen Now

Phil Wainewright: Helping Brands Engage with Social Media

Phil Wainewright interviews David Vap, VP of products at RightNow Technologies, and finds out how sharing best practices can help businesses understand how best to engage with online communities.

Listen Now

Peter Schooff: Making Every IT Dollar Result in a Desired Business Outcome: Scott Hebner of IBM Rati

Scott Hebner, Vice President of Marketing and Strategy for IBM Rational, discusses a topic on the top of every company's mind today: getting the most from IT investments.

Listen Now

Jessica Ann Mola: Where Will BI Fit In? Lyndsay Wise Explains

In BI, this tough economy and the increasing role of Web 2.0 and MDM are certainly topics on people's minds today. WiseAnalytics' Lyndsay Wise addresses each of them in this informative podcast.

Listen Now

Dennis Byron: Talking with...Deepak Singh of BPM Provider Adeptia

Deepak Singh, President and CTO of Adeptia, joins ebizQ's Dennis Byron in a podcast that gets its hand around the trend of industry-specific BPM.

Listen Now
More Podcasts
  • Most Popular
  • Quick Guide
  • Most Discussed

Quick Guide: What is BPM?

Learn More

Quick Guide: What is Event Processing?

Smart event processing can help your company run smarter and faster. This comprehensive guide helps you research the basics of complex event processing (CEP) and learn how to get started on the right foot with your CEP project using EDA, RFID, SOA, SCADA and other relevant technologies. Learn More

Quick Guide: What is Enterprise 2.0?

A lot of people are talking about Enterprise 2.0 as being the business application of Web 2.0 technology. However, there's still some debate on exactly what this technology entails, how it applies to today's business models, and which components bring true value. Some use the term Enterprise 2.0 exclusively to describe the use of social networking technologies in the enterprise, while others use it to describe a web economy platform, or the technological framework behind such a platform. Still others say that Enterprise 2.0 is all of these things. Learn More