Critics of SaaS sometimes play the FUD (fear, uncertainty and doubt) card of asking what happens if your SaaS provider goes bust? Do you lose your applications, your service, your data? Well, we're about to see what happens in this sort of situation following the collapse of Coghead, a Cloud vendor whose passing might also raise questions about the Platform as a Service (PaaS) concept.
Coghead was one of the more visible and more favoured Cloud Computing start-ups in Silicon Valley. It went live in October 2006, offering customers an online application development and hosting platform, a service which runs on Amazon's Elastic Compute Cloud. A few years on and it's a very different story...
The company attributes its closing to the dire economic situation, although some observers have also pointed to a perceived lack of portability standards in Cloud Computingas a potential contributor to its woes. With more established firms such as Google and Salesforce.com also preaching the PaaS gospel, the smaller Coghead might have been seen as not such a safe bet for those about to make a commitment to the cause of The Cloud.
"I think some customers raised [lack of standards] as an issue," conceded Paul McNamara, Coghead chairman and CEO, who said the firm had been active in trying to promote the cause of standards. “Interoperability is currently not there. We'd like to see standards evolve in terms of how that's done.”
Coghead's saviour – up to a point – is SAP, which has acquired the rights to the firm's technology. But it plans only to use this internally for its own ends to drive its own SaaS ambitions and will not continue running Coghead as a commercial, customer-facing operation. “SAP plans to use the Coghead IP as an internal development tool to increase the speed and efficiency in which SAP brings SaaS applications to market,” said a spokesman.
With that intent made clear, what about those who had entrusted their data to the Coghead platform? Essentially they need to find a new home – and quickly. SAP will discontinue the service to current Coghead customers, who only have until 30th April to access their applications and download their data and shift it elsewhere. "SAP did not assume any of Coghead’s customer relationships or obligations and, at this point in time, SAP does not have plans to continue offering the Coghead service commercially," said McNamara.
Good news for SAP
While SAP's intentions towards Cloud Computingand SaaS have been the subject of some debate, this move makes sense for the German supplier, reckons David Mitchell of research house Ovum. “Bringing the assets from Coghead into SAP will help SAP address some of the longer-term architectural challenges in moving from a traditional on-premise model to a SaaS or Cloud-based portfolio,” he reckoned.
"In particular some of the engineering work done by Coghead around the multi-tenancy problem will prove useful, as this problem is one of the more intractable issues when developing SaaS or cloud services in a manner that can deliver profitable revenues to the provider. Multi-tenancy is not the only way to deliver SaaS or cloud services but it can be a particularly effective way of ensuring that the operating costs for the service are kept as low as possible.”
The acquisition may also take some pressure off SAP's Business ByDesign delivery pressures. “When SAP launched its Business ByDesign service in 2007 the ambitions were very bold. The aim was for a $1 billion+ business and 10,000 or more new users by 2010,” said Mitchell. “Most commentators see SAP falling short of those goals and taking longer than originally anticipated to see a return on the hundreds of millions of dollars invested in the service. The assets from Coghead will not result in an immediate turnaround or acceleration of the SAP Business ByDesign portfolio, but it may well help when updating the products and its architecture to ensure that the cost to service model is correct and the service delivers profits to SAP once the uptake does accelerate.”
It seems unlikely that the Coghead demise will have wider implications for the PaaS movement as a whole, which is now underway. “For the [fourth] quarter, platform subscriptions represented more than 5% of new business in the quarter for a second quarter in a row,” said Salesforce.com CEO Marc Benioff this week. “Custom applications, that is, applications built by our customers natively on the Force.com platform crossed the 100,000 mark for the first time. All that platform momentum with Force.com is a clear indication to us that customers are ready for Cloud Computing applications
“It's not just customers who are embracing the Force.com platform Cloud, ISV partners are investing, too. The number of native apps more than tripled to 166 in the fourth quarter, up from 50 at the end of the third quarter. Developers signed on at a brisk rate as well, leaving the legacy client server application development world and entering The Cloud.”