's New Year Test: Will Service Outages Sink SaaS?

| About:, Inc. (CRM) (NYSE:CRM) gave its customers a belated New Year’s gift of unscheduled downtime Monday, which extended into Tuesday in some regions, according to its site.

While many of its corporate users might welcome a respite later in the year, most probably came back to work this week with the idea of pounding on their customer databases to generate new revenue opportunities to kickoff the new year. Being unable to access their online customer relationship management system probably didn’t make them too happy.

So, will this service disruption derail, the Software-as-a-Service (SaaS) and broader cloud computing movement? Only if these isolated incidents evolve into an ongoing pattern of declining performance.

Occasional problems happen. Back in 2007, I predicted that the on-demand services market would continue to soar despite more severe service delivery problems at NaviSite that year, because customers were already becoming convinced they could get a better return on investment (ROI) at a lower total cost of ownership (TCO) from SaaS. And, the SaaS market has grown faster and further than the industry analysts ever imagined.

The latest round of outages are certainly important reminders that SaaS and cloud computing vendors are vulnerable to service delivery issues. But, they shouldn’t distract us from the fact that most corporations and private institutions are equally, if not more susceptible to similar operational problems.

The only difference is that the IT staff within corporations and private institutions only have to support and report to a single customer, in most cases. and other SaaS/cloud vendors have rapidly growing customer populations to satisfy. Until now, this has been an inherent incentive to build highly resilient service delivery infrastructures and management processes to govern them.

In order to continue to scale and keep their customers happy, SaaS/cloud vendors must mitigate these risks and clearly demonstrate they can outperform inhouse IT/data center staff in the following ways,

  • Deliver better uptime rates
  • Provide greater proactive notification of service performance issues
  • Offer more information regarding the cause of problems and plans to mitigate future risks
  • Invite and act on customer feedback

In 2006, experienced a series of service outages which raised serious concerns about the reliability and quality of its services. In response, the company launched the site and set a new industry standard for service transparency.

If the company’s service issues continue, it will have to pull another ‘bunny’ out of its hat to keep customers from jumping ship. Not a bad test for the new year.

For the sake of the overall cloud computing movement, let’s hope they are up to the task.