SaaS Buyers Must Make Infrastructure a Major Focus in the Purchasing Process

SAN ANTONIO--According to a recent customer survey conducted by managed Web hosting provider Rackspace Managed Hosting, nearly 36 percent of responding SaaS customers do not know the uptime guarantees provided in the SaaS vendor Service Level Agreement (SLA), although security, application uptime and network connectivity are among their top technical concerns. The survey also concludes that 49 percent of enterprise Software as a Service (SaaS) customers do not know where the infrastructure behind their SaaS application lies, whether it is hosted internally with the SaaS provider or through a third-party hosting provider.

“What this survey tells us is that infrastructure issues are top concerns to SaaS customers, but unless they make infrastructure a priority on the due diligence ‘check list’ during the purchasing process, they will be left in the dark and ultimately open to unwanted outages or compromised data," said John Engates, chief technology officer, Rackspace Managed Hosting. “SaaS providers need to clearly communicate their hosting and infrastructure details in the Service Level Agreement, drilling down to security promises, uptime guarantees, network connectivity, data backup processes and more. This way, customers are aware of their SaaS provider’s service obligations, and they can rest assured their mission-critical applications such as e-mail or Customer Relationship Management software will perform as promised.”

As Rackspace’s SaaS survey hones in on infrastructure questions, it reveals that customers value application uptime differently for each category of SaaS application. E-mail and business productivity applications, such as spreadsheets and document creation, were listed as the most critical applications when it comes to availability with Customer Relationship Management (CRM) applications running a close second. SaaS customers value application uptime enough to pay significantly more for increased uptime guarantees:

• Thirty percent of SaaS customers would pay at least 25 percent more for four extra minutes of guaranteed uptime per month, taking them from a 99.99 percent uptime SLA (i.e. approximately four minutes unplanned downtime per month) to a 100 percent uptime SLA (i.e. zero minutes unplanned downtime per month).
• Fifty-five percent of SaaS customers would pay at least 10 percent more for 41 extra minutes of guaranteed uptime per month, moving up from a 99.9 percent uptime SLA (i.e. 45 minutes unplanned downtime per month) to 99.99 percent uptime SLA (i.e. approximately four minutes unplanned downtime per month).

Overall, the Rackspace survey revealed that SaaS is making significant traction in the small-to-medium size and enterprise market with 51 percent of respondents using a SaaS application and 72 percent of those users considering additional SaaS applications. Rather than a brief IT trend, 69 percent of respondents believe SaaS is the preferred software delivery method of the future, indicating infrastructure scalability will be top of mind for SaaS providers as their customer bases grow.

The methodology for this research involved sending an email survey via a third-party research tool, Clicktools, to 2,788 of Rackspace’s customers with annual revenue ranging from less than $1 million to more than $1 billion. Nearly 15 percent of survey recipients responded to the questions, and the majority of survey respondents’ annual revenue ranged from $0 to $49 million. Fifty-eight percent of respondents provide software services over the Internet and therefore are classified as SaaS providers. Detailed information and the full survey report can be found at http://www.rackspace.com/downloads/surveys/SaasSurvey.pdf.

About Rackspace Managed Hosting

A recognized leader in the global managed hosting market, Rackspace Managed Hosting delivers enterprise-level managed services to businesses of all sizes. Serving more than 10,000 customers in seven data centers worldwide, Rackspace integrates the industry’s best technologies for each customer need and delivers it as a service via the company’s award-winning Fanatical Support™. Through trusted relationships, Rackspace serves as an extension of its customers’ IT departments, enabling them to focus on their core business. Since its inception in 1998, Rackspace has grown more than 50 percent a year. For more information, please visit www.rackspace.com, or call 800-961-2888.