Evaluating software in the cloud

The decision to migrate to a new core business tool is not one to be taken lightly. We get new enquiries every day, and many people spend months (and sometimes years!) researching the functions and features of different tools on the market. We are asked lots of questions: can it handle my reporting requirements? Will it streamline my administrative processes? Is it easy for my staff to use? Can I track (insert some obscure thing we’ve never heard of before)?

Often, the lifetime considerations of the software choice are forgotten in the excitement of the great leap forward modern software can offer you. But in the rush to choose the solution, some of the risks of different delivery models are forgotten. Many types of business software are now available as software-as-a-service (SaaS), also known as a hosted service or software in the ‘cloud’. This means that instead of a physical server sitting in your office, holding your business critical data, your data lives ‘out there’ somewhere on the internet. You usually connect to it with a web browser. This is in contrast to traditional applications where you are responsible for installing and maintaing the software and physically hosting a server on your network, but where you have greater control.

Each model has benefits and drawbacks – it is important to consider what fits best for your size and style of business and weigh up the risks of various options to your organisation. What is important is not just the question of hosted or not hosted, but the questions you ask of your vendors and the consideration of the potential exit costs and the risks you are willing to expose your business to.

Some questions to ask a vendor providing a hosted solution:

• what is the SLA (Service Level Agreement)? This is very important since your entire business is potentially offline if their service goes down.
• how are backups made? Can you get copies of the backups on a regular basis?
• what are the limitation of the user interface. Web based applications can often suffer from poor user interface, especially with things like drag and drop, printing and opening multiple windows at once.
• if you have a backup, what can you do with it? Can you restore it locally and examine the data?
• what happens is the vendor goes out of business and their servers locked away by their creditors? What happens to your business?

And some questions to ask a vendor who licenses you a piece of software to use on your own hardware:

• how much support will you get to set it up?
• how will they support your hardware?
• do you have access to ALL the data in the database, including documentation of the db schema so you can extract the data should you need to? Or is the data in a proprietary format you cannot access? Look for terms such as “SQL” for some reassurance your data will be easy to get at.

At ish we spent a lot of effort on this choice. Each had key advantages: with a local database in your office, your data is always under your control. With a web site hosted in a carrier grade data centre, student web site access is not at the mercy of your office internet connection. In the end we settled on a blended approach: the primary data source is a piece of software and a license which lives within the college office. And a replication process pushes the web specific data out to a data centre for publishing to the world. Boy was that a lot of work, but after about 18 man-months of development effort on the replication systems we think it was worth it.

Access to your data and your exit strategy

Your student data, their enrolment history, and if you are an RTO, the students outcomes and certifications, are some of the most important assets your business owns. What happens when you lose access to this data, temporarily or forever? We are not just talking about off-site data backup here (and while that is crucial, not the whole of the solution) we are talking about the data itself, what format it is in, and how you can get your hands on it when you decide to end the relationship with your software provider.

Some possible risk scenarios:

1. What happens when your providers hosted online solution is unavailable? This can happen for many reasons – your internet connection might have gone down (it is not uncommon for a back-hoe to go through a data cable in a suburban street or for a telco to have an equipment failure), their hardware running your software may have failed, or your data base may have been exposed to a security vulnerability or become corrupted. In a wholly hosted model, for a matter of hours or even days you may have no access to your business-critical software. No enrolments, no reports, no ability to look up class numbers, dates or times, unless you happen to have some hard copy printed data lying about. Part of this risk can be mitigated by having a Service Level Agreement (SLA) and familiarising yourself with your providers hosting solution and data recovery plans. A fail-over plan to pen and paper is about the best you can hope for until services resume. You could look at redundant DSL links to your office, through separate ISPs; but having a decent BGP redundant setup is likely to cost you at least $5000 per month. At a data centre, at least three upstream redundant links is common and inexpensive.

2. What options do you have if your provider stops supporting your software product? Whether your solution is hosted or a local database, this risk can pose a variety of problems. Often you will need to transition your data to another product. Possibly another product by the same provider, in which case they may offer to transition the data for you at no or low cost. If at this time you choose to move to another product you may find a range of disincentives. For example, there may be no user-accesible way to export your data into a universal format (more of a risk for hosted solutions where your data is under the control of your provider) or there may be expensive charges involved, or they might downright refuse. Either way, you need to know before you sign up what options you have to change providers at a later date.

3. What happens if you stop paying your license fees? If your providers’ fees go through the roof or if for other reasons you choose to discontinue your use of your software product, what happens to your data and your access? In a purely hosted environment, your login may simply stop working. Game over. For locally installed software, you may continue to have access based on your existing agreement, without access to software updates or upgrades, locking you into your existing operating system, like Windows Vista for all eternity.

4. What will happen if your software provider goes out of business? Should your provider stop paying their data centre bills or shut up shop overnight, you risk losing both your data and your ability to access it if you have a purely hosted solution. A local solution poses less of a risk, as you will be able to continue to use your software, but may not be able to access any support or future product improvements. Do your due diligence in greater detail for a purely hosted solution – choose a quality provider and one that provides you with a local backup of your data in a universal format. In a worst case scenario you will at least have an historical copy of your data that, for a cost, you may be able to resurrect in a different software solution. If ish ever shut up shop, not only can you export your data but you can also purchase continuity insurance in the form of the product source code.

The company that owns the source code

The source code is the thousands of lines of programming language that make up the software you use. Application source code is complied into software with an install package that is particular to your operating system. Both hosted and and locally installed software have source code that often has many years of development behind it. This code is the intellectual property of the developer, like a book or piece of music is the intellectual property of the artist. How a developer allows access to this code is covered under the licensing agreement of the software product.

Some source code considerations when purchasing a software solution:

1. How many developers are employed to work on this product? Are you buying a solution from a dude working out of his bedroom or an established company with a team of developers? This is not to say that there aren’t some great programers developing quality software in their bedrooms, but unless they are open source, you run the risk of your product no longer being supported if your developer gets hit by a bus. It is easy to build a slick website to look like an international organisation, but beware those who hide behind shiny marketing materials and do not have the company structure to continue supporting your software if they lose key personnel.

2. What back end database runs my software? With a hosted solution, you would not have visibility of the database, and presumably not incur any of the database license costs. For a locally installed software solution, you should consider your IT experience and expertise with commercial database solutions, and the plugins like Crystal Reports, you may wish to use. Common enterprise grade databases include Oracle and Microsoft SQL. There are a range of specialised niche products like FileMaker, 4D and Lotus Approach, plus there are open source solutions like mySQL and Apache Derby. Unless your choice of software runs on an open source product, you will probably incur license fees to purchase the database and user licenses, independent to the user licenses for the software. Some databases are only supported on certain operating systems. Some software solutions are only built to plug into one proprietary database, giving you no flexibility in choice of tools. Having choice of the database engine is a good thing since it gives you more choice, particularly for reporting, and for ensuring the logevity of your data.

3. Is the source code accessible? For most solutions, no. Usually the only way to gain access to source code is to build your own custom solution, but that has its own set of problems like substantial cost, an immense amount of time, and long term lack of support and feature development. One option is to use an open source solution (no guarantees, but often no cost except your own time and IT skills to figure it out) or better still enter into an escrow agreement where the source code will be released to you under certain conditions. So if you want to take the product and develop it yourself, provided you aren’t going to sell it to other users, you can. And if your provider goes out of business, you have a nice insurance policy. If an escrow agreement is available, like with onCourse Enterprise it is worthwhile being aware of the technology used to build your software (we list ours here), as you will need to find appropriate developers should things turn pear shaped.

Where to next?

It can be difficult to compare the costs presented by different service providers, because sometimes you find yourself comparing apples to oranges. The costs associated with a hosted solution, and all the back end hardware and monitoring that is included is generally cheaper in the long term to the costs you will incur when you provide and manage a server that sits within your office – but can look more expensive upfront. The cost of the actual software can be mixed amongst these costs, with user licenses, transactional costs and support costs all playing their part in contributing to your overall expense.

While an important, and often immediate consideration, upfront cost is not the be all and end all to your product life cycle expenses – at the end of the day the expense to transition out of a poorly chosen product can be the most painful part of the process. By arming yourself with the right questions to ask your potential software provider, you will make sure you choose the right solution for your business for now and into the future.