Every disruptive technology has powerful enemies. Over the last few years, SaaS has battled a cynical Wall Street, FUD from on-premise software vendors, lack of support from systems integrators and outsourcers who have vested interests in sustaining their larger on-premise practices. But to their credit, many SaaS vendors have addressed up-time issues with interactive SLA scoreboards, security issues with SAS/70 audits and business continuity concerns with willingness to allow customer due diligence teams crawl through their data centers.
This year, a new FUD - that of viability in a recession - will show up as another concern around SaaS. I am hearing comments such as "at least with on-premise, vendors used to put their code in escrow". Forget that I have rarely seen a customer battle to get such code out of a escrow bank, the concern with SaaS is that option is not available at all. Indeed, Frank Scavo recommends customers thinking about ways to get out before you get into SaaS
Instead of being defensive about it, SaaS vendors, in my opinion, should tackle the issue head-on and adopt policies such as:
a) show customers how easy it would be for them to extract their data in case the vendor runs into turbulence
b) make back -up arrangements (including pre-payment) with a third party hosting company to keep the operations going for 6-12 months in case it needs to shut down to allow customers a bit more time for transition
c) since most software companies rarely go out of business, but instead get acquired adopt a "no forced march" clause requiring any acquirer to continue support for their product for at least 5 years.
d) similar to transparency SaaS vendors have adopted with their SLAs, adopt greater transparency around their financials. Share more information on funding status, bank covenants etc.
There will be plenty of viability rumors in this economy. Better for customers to hear directly from you than from rumors. Offense is the best defense.