"Software-as-a-Service is becoming more and more accepted as a deployment option for enterprise systems. But if the application is truly mission-critical, be sure you have an escape plan in advance" says Frank Scavo of the Enterprise Software Spectator.In his recent article "SaaS: plan to get out before you get in" Scavo discusses the issue of vendor lock-in involving the use of software-as-a-service (SaaS) for mission-critical applications. He points out that "If you thought vendor lock-in was a problem with traditional on-premise ERP software, think about the issue when it comes to SaaS. Under a perpetual license agreement for on-premise software, you always have the option of going off maintenance but continuing to run the software, and perhaps maintaining it yourself.But with SaaS, there is no such thing as going off maintenance. If you stop paying, access to your mission-critical system gets cut off."
"Therefore, I think it is important for buyers to think about what will happen if and when they decide to migrate from their SaaS provider. Specifically, there are two things I believe that buyers should ensure are in their license agreements:
First, if the SaaS provider offers an on-premise version (e.g. Oracle On-Demand), ensure that there are terms and conditions that allow you to transition to an on-premise version. This covers cases where you want to continue to use the software but are no longer satisfied with the hosting arrangement.
Second, if the SaaS providers does not offer an on-premise deployment option (e.g. Salesforce.com), be sure the provider gives you the ability to extract all master file and transactional data to an open format (e.g. XML). The ability should be repeatable--not a one-time right--so that you can develop migration programs to facilitate conversion to a new SaaS or on-premise solution. "
Small Businesses should be particularly concerned about whether or not the solution will fit the needs of the business for an extended period of time and through a variety of business conditions. The small business should also determine if there is a way to continue use of the solution (or transition from the solution) if the solution or the provider stop meeting the needs of the business. Small business owners are particularly at risk, because the SaaS solutions oriented towards small business users often don't have the on-premises options that some of their enterprise counterparts offer. And small businesses are the ones who are most likely to need to transition to another solution as the business grows. Further, the small business user often lacks the technical knowledge to manage the conversion effectively, and doesn't typically employ skilled in-house IT personnel to handle it for them. The result: consulting dollars get spent, just to retain the data the business already has.
The issue is that you are either a customer or you are not, meaning that companies can't keep their old SaaS solutions around just for historic data unless they wish to continue the subscription with the SaaS application. This is of particular concern with finance and accounting applications, as they are the core of the business intelligence, and the source for tax data, compliance, etc. Keeping the financial data for long term access is a requirement for most businesses.
Any small business - actually any business - electing to adopt SaaS-based solutions should give great care and consideration to how the business information might be protected and utilized in the event of a transition away from the online service. "In general, a lack of standards hampers the portability of data and applications between systems", says James Staten, an analyst at Forrester Research. He indicates that, while the popular hype implies that moving to the cloud doesn't require any heavy lifting, that's not true in some forms of cloud computing. "Particularly with software and platform as a service, vendors use unique and proprietary interfaces, application programming interfaces (API) and databases. Users and 3rd parties must program to those specifications in order to take advantage of the system. If they grow dissatisfied with the service, or if the vendor goes under, data and/or applications would need to be reformatted in order to switch providers or move it back in-house, which could be complex and costly."
Application hosting services may be a means to deliver the benefits of managed online application services to the business without also delivering the risks involved with SaaS application adoption. By providing access to business applications in a managed, secured environment, users gain the benefits of easy access and simplified IT management without also facing difficulties when discontinuing the service. Hosted applications offer the ability to return to an on-premises operating model, delivering the flexibility and the scalability the business needs without the concerns of loss of valuable business intelligence.