Posted on 29 May 2008 by James Blake

With increasing evidence of an economic slow down, technology investors need to target their money in areas which will whether the storm and continue to grow while budgets are tightened.

In a blog posting from earlier in the year, Joe Panettieri refers to Software-as-a-Service as 'recession proof software'.

Panettieri highlights some great points about SaaS vs on premises solutions vendors.

Mimecast, for instance, is more likely to see a migration to our services during an economic downturn.  Mimecast offers a flat known subscription cost that can be financed out of an operations budget.

When dealing with long-term retention and discovery of email, the cost of deploying, refreshing and maintaining an house solution represents a significant expense from both the capital and operations budgets. 

Couple this with the fact that the skills needed to maintain clustered archiving servers and the associated distributed storage area network technology might seem cheap now, but what if your budget is frozen or even worse, cut?

Retention for compliance purposes represents a perpetual problem - the solutions you put into place today need to offer scalability for an unknown future.  For instance, what new legislation does the government seem fit to enact in 7 years time, there is just no way of knowing?

Every 3 - 5 years the hardware that is used to provide email retention will come out of support.  At this time new hardware will need to be purchased, deployed, configured and existing data will need to be migrated - all while maintaining continuity and integrity of the archive.   Mail servers may need to be upgraded at the same time, potentially changing the format and availability of the email stored.  All this will need to be done ad infinitum. 

A common retention period of 7 years may involve 3 seperate hardware refreshes and migrations - expensive stuff in a time of recession.

SaaS eliminates these ongoing, and often unknown, costs.  SaaS provides a constant stream of innovations to provide the customer with an evolving and scalable solution without the need to constantly wrestle with costly hardware and software. 

A SaaS vendor's revenue is based on keeping the customer satisfied.  If I sell 10,000 subscriptions to a SaaS service in year one, 20,000 in year two and 30,000 in year three, I start year four with 60,000 paying customers.  An on premises vendor would need to sell 10,000 units in year one, 30,000 units in year two and 50,000 in year three - 90,000 in total as opposed to 60,000 - to achieve the same level growth.  This model gets exponentially worse every year.  This leads on premises vendors to often resort FUD-based selling to churn customers to the latest-and-greatest platforms.

SaaS is alive and well.  We can rely on an economic downturn to focus organisations on their inefficiencies and then provides them with a better option.

Category: Discovery, Email Storage Management, Retention

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