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The Dark Side of SaaS

7/23/08

Software-as-a-Service is a refreshing case of technology that has largely lived up to its hype. Larry Ellison’s Salesforce.com, the online CRM vendor, is perhaps the most visible such success story with a staggering marketcap of $8 billion.

Now thousands of companies routinely access vital software and data remotely despite initial fears of service interruptions and the limits such arrangements place on the user’s ability to change vendors.

But once in a while we’re reminded of how SaaS can still bite. Trade magazine Australian IT reports the case of 2Clix, a widely-used finance/accounting software vendor that began losing customers when it failed to customize its applications as promised and fix chronic bugs.

Clients who abandoned ship, migrated to another vendor and then attempted to retrieve their data, found that access was blocked unless they paid renewal licensing fees. Paying the license fee was particularly unappetizing considering the company had sued a consortium of users for defamation, lost, gone into receivership, then emerged with the same management team in charge. To quote 2CLix’s customers, their data were being “held for ransom.”

So for all the attractions of SaaS, know that caveat emptor still applies (and back-up your data locally).


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