SiliconBeat

For three years, Treb Ryan has been been offering customers of OpSource a going-out-of-business guarantee. If, by some unfortunate turn of fate, the software companies who host their applications at OpSource’s data center ceased operations, the Santa Clara company would take over. OpSource would run the software its now-defunct former customer had sold and make sure the data associated with applications was accessible.
Ryan called this an “application service guarantee” or “SaaS Escrow,” for Sofware as a Service, the latest industry buzzword for software that is delivered over the Internet by a third party.
But the guarantee still made for a pretty pessimistic sales pitch and until recently no one took Ryan up on it.
That changed in the last three months. Half a dozen software companies who host their their applications at OpSource have asked the company to stand up and vouch for them to the big enterprise companies they are pitching their products to.
The guarantee is no longer a dark joke. If not addressed directly, concerns that small software companies will go under could become self-fulfilling prophesies.
According to William McNee, founder of Saugatuck Technology, a consulting firm headquartered in Westport, Conn, a survey of well over 1,000 CIOs showed that companies who are considering subscribing to new software packages are now as concerned with business viability, business continuity and disaster recovery as they once were with functionality and security.
The recession is bringing out the worrier in corporate procurement officers.
Ryan tells the story of a company — one of OpSource’s customers — that was trying to sell software for configuring price quotes to GE. The GE executive was not only interested in the going-out-of-business guarantee, but in the nitty-gritty details of how the data center where the software was hosted was run.
“We all know that ethernet cables degrade over time,” the GE executive said. He asked the software company to tell him about the “ethernet cable rotation policy.”
For those readers who don’t work in the IT department of a major company, this was a little like demanding the woman at the American Airlines ticket counter tell you how often a plane’s tires are changed before you buy your ticket to Miami.
Luckily, OpSource not only had a ethernet cable rotation policy, they had a copy of an independent audit confirming that they did indeed regularly change out their cables. They sent a copy of the audit to GE.
What started with a grim guarantee had a fairy tale ending: The software company made the sale and, in turn, doubled its business with OpSource.