Clouds of caution

The level of understanding and interest in software-as-a-service (SaaS) and cloud computing among business has exploded in the past years.

But at Information Age’s most recent roundtable debate, in which the assembled IT decision makers discussed the pros and cons of the new computing models, it was clear that reservations remain.

There were certainly plenty of positive experiences to share. Cost reduction is at the top of the IT agenda, and cloud computing and SaaS are seen as a lifeline.

At the event – supported by SaaS vendor – one attendee marvelled at the potential for cloud computing to radically reduce the cost of provisioning computing power. “I heard of a researcher at a pharmaceutical company that needed thousands of extra processors to run a protein folding simulation,” said the IT executive from an investment bank. “They used Amazon’s Web Services, and it cost them around $80 in total.”

But amid the excitement, there were concerns, even among those attendees that had already opted for SaaS applications.

An IT manager from a City finance firm observed that while much is made of the cheaper set-up costs of SaaS applications, few organisations consider the long-term cost of choosing a subscription model for software deployment.

“People don’t tend to think about IT projects in terms of long-term costs,” they said. “It has to be remembered that with SaaS, the cost is ongoing.”

The suggestion that the monthly, operational expenditure associated with SaaS engagements is preferable to capital outlay in times of downturn was countered by one delegate, an IT manager from a major media organisation, “It’s not a case of moving to operational spend; it’s a case of no spend at all. “The only projects that will get approval in the next twelve months will be those that create a revenue stream,” he added. From a cost perspective, whether systems are deployed on a SaaS or proprietary basis will have little bearing in his organisation, for the time being.

Control issues

While it was acknowledged that businesses have, in general, warmed up to the idea of allowing data to be held outside organisation, fears remain – and with good reason, according to the VP for IT of a large high street bank.

“The issues around control are real,” they explained. “If services we offer are based on SaaS applications, then our reputation is based on the SaaS provider’s ability to execute.”

A lawyer in attendance raised a pertinent concern: “If you have business-critical data stored on a SaaS provider’s data centre, what will happen to it if they go out of business? Customers are very exposed unless they have built ‘step-in’ rights in their contracts.”

Another SaaS user revealed that while they take their own measures to safeguard the data associated within the application service, they would still be severely impacted should the service be interrupted. “We back up our data, but the back-ups are not much use without the front-end application,” he said.

Despite these concerns, the delegates identified an external factor that may force their hand, namely the expectations of younger entrants to the workforce.

The flexibility offered by SaaS applications will be a minimum requirement for Generation Y workers, most agreed.

“The next generation is going to work wherever they want to work, however they want; if they can’t, they won’t work for you,” said the media group IT manager. “That attitude is already out there.”



Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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