I was disappointed with last weeks eWeek articles covering SaaS reliability. They covered KITE for measuring reliability, but did not cover similar offerings such as Gomez or Siteseer. Their top 10 things you should know now about SaaS read like a bunch of scare tactics; is it really cost effective, can they maintain SLAs, is the vendor viable – all real, legitimate concerns, but somewhat an imbalanced article without much mention on the possible benefits of SaaS. In contrast, CIO Magazine (through the Cutter Consortium) is reporting a poll showing that SaaS adoption is surging and that 63% are now using SaaS vs. only 32% in 2007. In addition IDC has increased its SaaS growth projection for 2009 from 36% growth to 42% growth over 2008.SaaS is attractive to buyers because a software solution can be deployed rapidly and with low upfront cost. The better SaaS vendors will allow you to sign up for trials online and pay for small installments with a credit card. They’ll openly publish SLA’s and uptime performance. The best SaaS vendors publish their APIs and even sport developer networks or application libraries to help you build and integrate solutions. So what’s not to like about SaaS?

For one thing, there are many vendors now selling their software as services. The enterprise and even small business sales cycle and success for software is challenging even in good times. SaaS gives the software vendor the possibility of selling at a faster sales cycle. The problem is that the SaaS vendor has to solve two fundamental technology problems: (a) writing and supporting really good software and (b) hosting many customers at competitive service levels and required security. Solving the hosting problem can be challenging, especially for young SaaS vendors or ones that are experiencing rapid growth. As the buyer, it can be very difficult to evaluate hosting and customer service levels without signing up and experiencing it. It doesn’t get any easier for large SaaS vendors who have to figure out larger scale software rollouts, performance and scalability issues.

These potential risks can become real issues if business managers choose to sign up SaaS vendors without consultation or due diligence provided by the IT and legal departments. My advice – have a game plan on evaluating these vendors. I’ll share some secrets in an upcoming post.