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Online Services Outage Raises SaaS Questions

Microsoft has just fixed another outage of some of its more popular Live services -- the erstwhile Hotmail and MSN Messenger among them.

When we hear about this kind of incident here at RCPU, we can't help but question the current viability of Software as a Service for business-critical applications. OK, sure, we know that Hotmail and MSN Messenger (or whatever they're called now -- Windows Live something or other) aren't exactly business-critical for most companies. (In fact, the IM outage might have increased productivity in a lot of offices.) And we know that Microsoft doesn't make uptime guarantees for these consumer services the way it would for mission-critical stuff, a point made by the always wise Scott Bekker, RCP's editor in chief. Furthermore, we know that when it comes to CRM and ERP, for example, partners, not Microsoft, are taking on most of the hosting duties -- all of them in the case of hosted Dynamics ERP.

Still (oh, you were expecting a "But" or a "However," but we dropped a "Still" on you), even if hosted Web-based e-mail and hosted enterprise applications don't make for a good apples-to-apples comparison, huge problems with Hotmail don't exactly instill confidence in partners or IT folks mulling over the idea of outsourcing important enterprise functions to a hosted model. Just by coincidence -- and, we admit, the Hotmail outage couldn't have come at a better time -- we discuss this very issue (specifically, whether the SaaS model can handle ERP) in the RCP March cover story.

Now, Salesfoce.com and NetSuite would tell us, quite accurately, that they've not had anything near the relatively severe problems with uptime that Microsoft has experienced with Hotmail and IM. And Microsoft itself, we believe (although this is, admittedly, a bit of an assumption), has a better track record with hosting business-critical applications than it has with hosting Web-based e-mail. But SaaS outages of any kind are a bit like distant earthquakes for people who live near fault lines -- even if they don't happen in your part of the world, they remind you that you're vulnerable. That's a hurdle, largely psychological, which SaaS still has to clear when it comes to business-critical applications, and this week's Hotmail incident might have pushed that hurdle a couple of inches higher.

Do outages such as the one Microsoft experienced this week make you think twice about a SaaS model? Expound on your answer at lpender@rcpmag.com.

Posted by Lee Pender on February 28, 2008 at 11:54 AM