I happened upon an interesting article by my favorite tech curmudgeon, John C. Dvorak, in PC Magazine. In the July 2008 issue (yes, I'm still way behind on my magazines), he puts together a list of good reasons why "the future" of computing, namely SaaS and Cloud Computing is just another way to make even more money and can actually be problematic for companies. I've always felt that small companies can benefit greatly from hosted services and cloud applications, but larger companies need to tread lightly when making the ROI comparisons and need to understand the inherent issues having data and servers off-site, managed entirely by a 3rd party. Previously I couldn't fully articulate all of my concerns, but Dvorak does a brilliant job of bringing them to light. Below is his list, from Ode to Shrink Wrap, with some of my own comments.
2. There's No Protection from Government Spooks - The government can get access to all of your data anytime. Do they even need a search warrant anymore?
3. Industrial Espionage is Easy - Depending on the vendor it may or may not be "easy", but how many public companies and public institutions have been hacked in the last few years?
4. It's Too Expensive - It'll start cheap or free, but goes up from there. Anyone that has witnessed an SAP implementation knows this well.
5. It's Not Mechanisable - People like shrink-wrap, cool graphics and shiny boxes. I suppose the electronics store could have a card to take to the register similar to buying Sudafed.
6. Users Have No Sense of Ownership - People like having things, like books, boxes, disks, etc. It's just not the same printing a receipt from a website.
7. When Online Software Companies Go Under, So Does Your Software - And you are left with a unusable backup of your data; maybe thousands can be spent getting it converted. Where did the data go the XDrive.com was storing. I had data there, albeit just to test the service, and received no notice when they closed down.
8. Users Are Subservient to Terms-of-Service Agreements - Imagine getting shutout because you violated line 2419 of the service agreement, will you still be in business by the time it gets sorted out. What if a new uglier agreement comes along?
10. Potential for Gouging - Sort along the lines of number 4, but if they have you over a barrel and you don't have the resources to switch to a new provider (or worse they are the only one who offers the service) then start coughing up more money.
Again, I don't think SaaS and Cloud Computing is inherently bad, but it is something that needs strong consideration before putting all the company eggs in someone elses basket.