10/16/13

SaaS Recovery and Escrow Alternatives – Planning for Continuity on a Rainy Day in the Cloud

Related Practices

Related Industries

Attorneys & Professionals

Ease, simplicity, and low start-up costs are just some of the reasons customers turn to software-based "cloud" applications and services.  These include software-as-a-service (SaaS), application service provider (ASP), and similar arrangements, but for simplicity these are referred to in this Alert as "SaaS."

An increasingly popular alternative to the more traditional on-premises software, delivered and licensed to a customer, the SaaS vendor's application runs on the vendor's (or the vendor's contractor's) infrastructure.  Importantly, the customer's proprietary data is also typically housed on the vendor's infrastructure.

Risks to Customers

What happens when:

A customer's lifeblood is the ability to access and use its applications and data.  And it takes time to find an alternative vendor, negotiate a new contract, configure and implement a new solution, and migrate data.

Partial Solutions for Customers

Newer, More Robust Solutions for Customers

Opportunity for Vendors

While the above solutions are centered on the customer's concerns, a SaaS vendor that anticipates and addresses these concerns may have a competitive advantage and capability to convince wary CIOs and CEOs that their continuity needs will be met.  Some estimates are that 70%+ of SaaS vendors do not guarantee application continuity.  Vendors seeking customer adoption of SaaS solutions for mission-critical and enterprise software must address these risks.

Best Practices

While the cost and ease of SaaS cloud services are attractive, the rainy day may come when systems go down or vendors fail.  Customer continuity needs will vary, but the customer should ask the prospective SaaS vendor hard questions, plan, and ensure that contractual arrangements with the vendor and third parties reflect the desired solutions.

For more information, please contact Craig R. Auge, crauge@vorys.com, 614.464.5684.