SaaS and Hosting

Updated: April 30, 2009

Last year, Gartner Inc . analyst Robert Desisto predicted that a quarter of new business software will be provided as a service by 2011. That's an impressive figure, considering that the current batch of hosted software has been around for only a few years. But that's still long enough for some industry observers to view Desisto's forecast more as a threat than a prediction.


SaaS (software as a service) is certainly a hot technology, but software developers are discovering that finding the right provider to host their applications can be a difficult and treacherous undertaking. Since SaaS is relatively new (at least as a mainstream technology), hosting providers simply don't have a great deal of experience working with it. Likewise, many developers lack experience distributing their creations via the Internet. This often leads to an outcome that's not very pretty for hosts, developers and ultimately users.

Still, there are several definitive steps developers can take to find a hosting provider that's competent, efficient, reliable and affordable. Here's what to look for:

Experience: As noted previously, it can be difficult to find a hosting provider with a lengthy SaaS track record. On the other hand, one can get a general idea of how well a provider is performing by checking out its client list. A good sign that a provider knows what it's doing is whether it has a deep, established and satisfied client base.

Technical Resources: Just about any hosting provider can claim that it supports SaaS, but the only sure way for a prospective client to cut through the smoke is to look at the company's infrastructure. For SaaS hosting, high-quality hardware is a must, including fault-tolerant servers (preferably with redundant, hot-swappable components). High-availability clusters in load-balancing configurations are also desirable.

Service Guarantees: Look for a hosting provider that's willing to put its money where its mouth is. If the company is truly capable of providing high-quality SaaS hosting, it should be able to guarantee specific, predetermined performance levels in terms of bandwidth and responsiveness. And make sure you see the three famous letters — SLA (service-level agreement) — before you agree to a contract.

Flexibility: A hosting provider should be willing to work with a software vendor to quickly and easily scale hosting services in lockstep with customer demands.

Connectivity: Adequate, reliable connectivity is the lifeblood of any SaaS venture. That's why it's critical to carefully examine the quality, number and size of the hosting provider's backbone data links. Look for a hosting company with two or even three high-quality backbone providers.

Support: Many SaaS customer questions and complaints relate to the hosting service, so the provider must be able to offer some form of SaaS support. An arrangement must be made between the hosting company and the software vendor either for joint support operations or for the host to assume full responsibility for all support activities. The latter option requires the provider's support staff to be trained and equipped to handle queries related to the SaaS software itself, not just the hosting environment.

Billing Services: As with support operations, a process must be developed for providing SaaS billing services. The hosting provider can either assume all billing responsibilities or serve as an advisor. In either case, the partners will have to create a resource-sharing arrangement, addressing issues such as billing staff, payment gateways and accounting software .

Price: While price should never be the sole determining factor for signing with a hosting provider, it remains an important consideration. After evaluating all the key points described above, you'll want to work with a hosting company that offers the best value.

The search for an SaaS hosting provider requires careful research and thought, but it really boils down to three fundamental issues: competency, resources and cost.

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