Enterprises Fear SaaS Model, Survey Finds

Companies fear losing control of archived data to partners, despite recognizing the benefits of outsourcing such as cutting costs and reducing management complexities.

Despite the benefits and increasing popularity of the Software as a Service (SaaS) model, companies are still wary about the idea of farming out data archiving to a partner.

Just 24 percent of enterprises are using hosted archiving solutions, compared to 76 percent using on-premise technologies, according to a new study by the Radicati Group, a research firm.

That's in spite of burgeoning sentiment that outsourcing can cut costs and reduce management complexities, problems facing enterprises struggling to meet compliance and retention mandates.

"Hosted archiving has matured slower than we anticipated a few years ago," CEO Sara Radicati said during a Web conference. "There is much excitement about SaaS and greater appreciation of outsourcing in general, but the uptake has been slow."

The reason? Fear, pure and simple.

Enterprises are worried about data going missing, or not being able to retrieve it when the lawyers or regulators come calling, Radicati said.

Another worry is security, as enterprises fear that data could more easily be compromised when stored offsite.

The trend comes despite growing needs for greater efficiency and lowered costs in data storage, as enterprises faces sprawling e-mail and document archives and mounting compliance and security concerns.

Radicati also said that enterprises are showing reluctance to adopt an SaaS model for their data even though hosted archiving is cheaper, easier to deploy and typically provides enterprises with the latest and greatest features.

"There are no hardware or compatibility issues. You can have it up and running in hours, and it provides a predictable cost," Radicati said, adding that on-site solutions require tons of tech expertise and blow budgets as unexpected integration issues typically occur.

Today's slow adoption rate is expected to change, however. The market is experiencing 300 to 400 percent growth each year, according to the Radicati Group, which predicts the market will go from $558 million in 200 to $2.7 billion by 2012.

That growth will come once enterprises become aware that there are trustworthy providers in the market, according to several e-mail hosting companies.

"For the small enterprise, those with less than 50 employees, the return on investment is justification alone to use a hosted solution," said Doug Howard, chief strategy officer at e-mail hosting company USA.NET, during the conference call.

Added Matthew Smith, president and COO of e-mail hosting firm LiveOffice, "The big objection today is the trust issue."

"We'll continue to have the issues but as soon as enterprises begin getting more comfortable with outsourcing, the situation will change."

(This article was adapted from

TAGS: security,software,SaaS,Enterprise,Storage

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