Iron Mountain Stirs Escrow into SaaS

By Tim Stammers

Computer Business Online

Thursday, April 26

Iron Mountain is offering itself as a form of backstop for online service providers, with a package of its own software escrow and online backup services.
The aim is to reassure customers who might be nervous about relying on applications provided by hosting or software-as-a-service providers, especially when those providers are small and their prospects uncertain.
Called SaaSProtect Escrow, the service will see Iron Mountain store a copy of application software under escrow. If there is a problem with a hosting service, for example because the provider has gone out of business or has decided to stop hosting a particular application, Iron Mountain can give customers the source and object code need to bring applications back to life on their own premises.
That will provide some degree of protection for the applications themselves, although obviously it might not provide instant, DR-style restoration of applications.
To protect the data that the applications generate, Iron Mountain is offering its LiveVault online archiving services. Since the third-party online service providers will be storing that data on their own premises, the LiveVault services will be backing up precisely those third-party hosting centers.
Iron Mountain cited a Gartner estimate that the market for online services will grow from $6bn last year to $19bn by 2011, with most of the revenue going to new providers rather than large existing companies.
One reason why the balance will be skewed towards smaller companies is that online services will often involve applications tailored for specific industries or vertical markets, Iron Mountain said. But the archiving giant said that SaaSProtect might also be used to protect applications based on customized versions of high volume software.
Iron Mountain has been offering software escrow services since around four years ago, when it bought escrow specialist DSI Technology. The archiving giant claims that 75% of the Fortune 1000 uses its escrow services to protect themselves when buying software, mostly against problems with smaller software developers going out of business.
The conditions under which Iron Mountain releases software from escrow is agreed between parties in advance, and can include cessation of maintenance services, alongside the ultimate plug-pulling move of going out of business.
So far the escrow has only concerned source code, because the associated object code has of course been running on customers’ servers and client hardware. The latter is not the case when providers are hosting applications, so SaaSProtect adds object code to the escrow stack.
Iron Mountain said that pricing for the service varies according to circumstances. Initial set-up fees are around $3,000, and annual fees are around $3,200. LiveVault is priced separately starts at $1,900 annually and varies according to data volumes and level of protection as scheduled or continuous.
Our View

Iron Mountain’s offer makes a lot of sense. But it also underlines one of the major problems that has always faced the suppliers of online application services. This is that customers are nervous about putting both their applications and associated data into the hands of third parties that can pull the plug at any time, for any of a range of reasons.
The very fact that Iron Mountain believes that there could be demand for this underlines one of the weaknesses of the SaaS model, which is sense of vulnerability it can inspire in customers.