For additional analysis on SaaS, please see our latest blog post which can be found here.


Small and medium-sized businesses are turning to software as a service (SaaS) solutions for their IT needs more and more frequently. SaaS solutions can provide end-users with quicker, cheaper access to software that they might not otherwise have at their disposal. SaaS solutions can also be more scalable which is important for early-stage companies.  However, SaaS and cloud data storage are still relatively nascent technologies and  carry some risks.  When your business turns to SaaS and cloud solutions, consider the following three major issues:

  1. Data Security:  Data breaches happen all the time. News reports of hacking and industrial espionage hit the headlines daily and present a serious threat to small and medium sized businesses. On-premise software still presents its own set of security concerns, but be wary of new technologies and vendors who do not have a robust security system in place.
  2. Ongoing Business Concerns:  Small and medium sized businesses many times have no option but to outsource certain tasks, such as IT. However, when you outsource IT, you lose control over how your service provider is doing business-wise and can open yourself up to various risks.
  3. Availability:  Employees at small or medium sized businesses work 24/7 and need access to company data 24/7. However, with SaaS and cloud computing, outside issues like internet and power outages are a common problem.

Keeping these three issues in mind, what should you do? First, perform due diligence on your vendors, and filter out mediocre SaaS providers and find the right solution for your business.  Ask vendors about their disaster plans and recovery methods, risk analyses and protocols.  Request information and recommendations from current customers.  Find out if there have been prior security breaches.  Read any terms and conditions, and don’t skip the fine print.  Make sure that any software or data that is critical for the continuation of your work is escrowed. A well-drafted software escrow agreement can go a long way in the event of an issue. If any customizations or updates to the software are done specifically for your business, make sure that those are covered as well, not just the original software version.

The bottom line: expect the unexpected and mitigate any future security issues that might arise.