Using customised software as a service (SaaS) for general business functions and mission critical functions has many advantages.

However, IT insolvency statistics suggest that without an effective disaster recovery strategy, businesses utilising this technology could be seriously damaged as the result of SaaS providers becoming bankrupt.

So, what’s your plan B? The likelihood is; you haven’t got one.

SaaS offers companies a raft of cost and time saving benefits; minimising resources necessary for software implementation, maintenance and hardware upgrades. The approach also focuses application deployment on business performance rather than internal infrastructure, and provides immediate access to new innovations that cannot be realised through traditional licensed software.

There are, however, a number of issues that any business should address before they deploy SaaS. For most organisations, the security of their own data, which will commonly be contained on the vendor’s server, is the primary concern.

But this is not the only potential loss that businesses looking to the SaaS model face. While most are rightly concerned with the security of their data, many fail to consider the ongoing availability of the application itself and, should this application be compromised and become unavailable, how they would recover.

While this problem should be addressed when deploying traditional software hosted on a business’ infrastructure, the consequences of losing access to a business critical application are magnified when the application and end user data are stored elsewhere, as with SaaS. An extended or permanent outage not only removes the user’s ability to support the application in the event of an error; it prevents them from accessing the application, its platform and their data altogether. The effects are immediate and can cause serious damage to an organisation, which can no longer perform essential tasks.

Recent statistics released by the UK Insolvency Service noted a 129 per cent increase in the number of businesses in the IT sector in England and Wales going into administration in the final quarter of 2008*. In 2009, this number is expected to rise further.

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Taking into account the risk of a supplier becoming bankrupt during the downturn, or a vendor failing to meet their contractual obligations, SaaS should be supported by a disaster recovery solution.

The most effective solution is software escrow, an agreement which protects organisations that are increasingly dependant on software that they don’t own or control. Under the terms of an escrow agreement, approved by the organisation, the SaaS provider and a trusted third party escrow provider, the escrow provider securely holds a copy of the application executables, end user data and source code on behalf of the organisation.

The information held is updated at regular intervals with the agreement of the SaaS provider to ensure that the deposit held is up to date and reflects the latest version of the application. Should the worst happen, the escrow provider can legally release the data, source code and application executables so that the end user organisation can source an alternative infrastructure and continue operations with minimal disruption to their business.

Escrow agreements vary, and can be tailored to the needs of the business. Dependent on the type of agreement, deposit intervals can be more or less frequent, or code can be updated in real-time; the escrow agent can provide a duplicate operating environment should a company not wish to source an alternative platform; and all the necessary information can be held in multiple safe locations.

The importance of SaaS escrow is reflected in take up from SaaS providers. It is essential in any business relationship, especially during a recession, for a provider to instil confidence in its customers, and SaaS providers are becoming aware of this. If they are unwilling to appease a company which is keen to secure access to a critical application should it become unavailable, it’s probably time for the business to look elsewhere.

The devastating effects of the recession are far reaching, and for companies already feeling the pinch, losing essential software could be the final nail in the coffin. The potential for software companies to become insolvent is very real and now, more than ever, escrow should be considered as an essential facet of a wider disaster recovery strategy.

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