SaaS Provider With No Backup Facility?
July 6th, 2007 By: Rich Miller
When it comes to disaster recovery, it’s still surprising to see large operations that appear to be working without a net. Eric Norlin at NGDC points to an item about NetSuite, an enteprise software company which delivers its offerings online via a software as a service (SaaS) model. NetSuite is preparing to go public, and its pre-offering filing with the SEC includes a description of its data center operations that has left industry watchers underwhelmed:
We host our services and serve all of our customers from a single third-party data center facility located in California. We do not control the operation of this facility. … Our data facility is located in an area known for seismic activity, increasing our susceptibility to the risk that an earthquake could significantly harm the operations of this facility. … We do not currently operate or maintain a backup data center for any of our services or for any of our customers’ data, which increases our vulnerability to interruptions or delays in our service.
As analyst Jason Wood notes, NetSuite has 5,300 customers and $67mm in 2006 revenues. Its majority owner is Oracle CEO Larry Ellison, one of the world’s wealthiest men, so it can certainly afford a backup facility. Perhaps they’re waiting to use the IPO revenues to beef up their infrastructure.
Gilbert PilzPosted July 17th, 2007
This shouldn’t come as a surprise to anyone. Subscription based services take notoriously long to reach the break-even point. Every dollar spent building/buying things like backup centers, etc. just lengthens that time. The problem is that for supporting services like security, business continuity, etc. it is difficult for the customer to determine “how much” the SaaS vendor is supplying and whether that level is “enough” for their needs. The interesting question to me is the extent to which NetSuite made their customers aware that they had no backup facilities?