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Unlike many of his peers who remain wary of SAAS (software-as-a-service) products, The Schumacher Group chief information officer Douglas Menefee has taken advantage of hosted applications to let his IT team do less software maintenance and support and instead focus on more valuable development and integration work.

Such contractual agreements, known as SLAs, bind the SaaS provider to meet specified levels of service. An SLA can address various aspects of the service, such as application uptime and performance, as well as data security, backup, recovery, and integrity. The SLA outlines penalties — often in the form of credits — if certain standards aren't met.

An SLA is of particular importance for a hosted application, since in that case the customer is giving up control over the software and thus has little or no power to fix problems that arise on the SaaS vendor's end.

In other words, a business manager must make sure that a selected SaaS vendor can provide the level of reliable service the company needs. "IT [and business] managers need to understand the consequences for their operations if there's a problem. [They should] determine what downtime they can tolerate and compare that with what the vendor is offering," says Eric Maiwald, a Burton Group analyst.

Once a contract is signed and the hosted applications are implemented and woven into a company's workflow, migrating away to another provider will be costly and time-consuming.

Few agreements available

Unfortunately, SLAs are far from prevalent among SaaS vendors — and when offered, the standard agreements typically are thin and limited. That goes for large and small vendors alike. "For the most part, SLAs haven't been in place for the broad cross-section of SaaS [offerings] currently available," says Jeff Kaplan, a ThinkStrategies analyst.

For example, the Google Apps Premier Edition suite contains an availability guarantee only for its Gmail portion (for 99.9 percent uptime) and offers no commitment for the other components, which include word processing, spreadsheet, and presentation software.

"It would be comforting to have an SLA that covered the entire suite," says Mark Harrison, founding partner of Abraham Harrison, provider of online marketing services.

Abraham Harrison, founded in late 2006 and incorporated in early 2007, has been using Google Apps Premier Edition for about one year, and the uptime of its hosted applications and services, though not 100 percent, has been excellent, according to Mark Harrison. Downtime incidents have been rare and brief, and have never proven disruptive to the company's operations, he says. "We've never been crippled by an outage," Harrison says.

Still, should a significant Google Apps outage occur, it certainly would impact the company, which is highly dependent on the suite. The company chose Google Apps in order to give its geographically dispersed staff an array of software to use for communication and collaboration. In addition to the suite's productivity applications, the company also uses Google Talk instant messenger and Gmail for email.

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