PaaS risks

by admin on February 24, 2009

in Cloud Computing/SaaS,Featured,General

The demise of Coghead last week raises a number of questions. Aside from the inevitable speculation about what SAP will do with the acquired assets, Phil Wainewright raised the ‘elephant on the room’ question:

The problem with PaaS, as Coghead’s customers are now discovering to their dismay, isn’t so much lock-in as lock-out. They knew they were locked-in to Coghead’s platform, but that’s nothing unusual in the world of software development…

…What’s different with PaaS is that you don’t always have the option of staying on. Coghead’s new owner SAP will impose a lock-out from April 30, leaving all its current customers suddenly in the impossible position of having around eight weeks to completely rewrite all their applications on an entirely new platform. It’s small comfort to know that your data’s accessible if all the automation you’ve built up to process it is about to disappear. I would be crushed right now if I had built any kind of functionality using Coghead (and I’ll be honest, I had been considering it).

Phil’s slightly off kilter with this because SAP is not acquiring the customers, ergo it cannot be locking them out. Even so, the effect is the same. No home for proprietary technology that in any event was in the relatively early stages of its life.

What makes this unusual is that software companies rarely die, they usually get acquired. That didn’t quite happen and so exposed customers to the problems Phil outlines.

One of my key questions whenever considering new software centers on vendor validation. It’s a chicken and egg question in that a new vendor with few customers is unlikely to get my support without knowledge of a potential exit strategy or details of its funding. If things go wrong then I want to know that data can be got at. In most cases, that’s possible. But in PaaS – or Platform as a Service – you’re in an entirely different ball game. PaaS means you are entrusting development to an entire infrastructure. While that is great as a cost saver, it’s a disaster when the platform provider goes belly up.

PaaS is one of the cornerstones for cloud based computing – such as SaaS and all the other aaS’s we’ve yet to ‘discover.’ An example is’s platform which CODA uses for its CODA2Go solution. At a more basic level you can argue Amazon’s elastic cloud contains PaaS elements. I’d even stretch this as far as Twitter out of which hundreds of applications have been developed and yet, while well funded, still has no business model. Ergo it is in pure cash burn territory.

As vlvl correctly pointed out in a direct message:

I also think that when calculating the TCO/ROI of PAAS solutions one has to count possible ‘emergency migration’ cost.

This raises yet another question. Commenters on cloud computing are quick to ridicule the large players such as SAP, Oracle and Microsoft for not jumping onto PaaS (and all things ‘cloud’) but when you see the immaturity of the technology and the miniscule levels of startup funding, hanging back starts to make a lot of sense.

For end user companies to be comfortable with these new forms of technology, there has to be a solid base. Otherwise, the large players who may be relying upon them are passing on a risk over which they have little control. No enterprise buyer in his/her right mind is going to allow that to happen. That means we need to see a much stronger financial commitment, obvious signs of success and a lot less hubris in the PaaS arena.

Of course to those of us who are bean counters, this is all too obvious.

As an aside, this is a topic I touched upon during last weekend’s Enterprise Geek’s podcast, where I was a guest of Eddie Herrmann, Colgate-Palmolive and Thomas Jung, SAP.

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Comments on this entry are closed.

John P February 25, 2009 at 2:48 pm

Among all the companies offering to help Coghead customers, an interesting case comes from Wolf Frameworks, migrating coghead based applications without rebuilding the app design. check it out here:

Riku Seppäl&aum June 15, 2009 at 6:37 pm

Big corporations are known for not getting left behind in disruptions. I would say the current situation is similar to what happened with the change to desktop computing.

The financial benefits, especially for SME's of cloud services can be significant. The economies of scale for PaaS vendors is the fact behind this. So for bean counters… Well, actually PaaS makes a lot of business sense, and that big corporations don't jump on it right away is not an argument against it.

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