One of the major causes of the financial bubbles is derivatives. In theory, they're a good thing, but even though they seem very easy to understand, they're sometimes too complicated when things go wrong, and they can bring down entire companies.
We have something similar in IT: Software as a Service. In theory, it's a good thing. You can build entire companies on top of it, but even though it seems very easy to understand, it's sometimes too complicated when things go wrong, and it can bring down entire companies.
Many things can go wrong:
* Your provider may go bust. Needhost.dk just went bankrupt, and customers have no access to their data any more. There was no warning.
* Network connections deteriorate to a level where the software does not respond well enough to be usable. Almost no company provide enough metrics to be able to specify a minimum service level that solves all thinkable problems.
* Network connection bandwidth may deteriorate to a level where your data can no longer be transferred quickly enough to make backups or to move to another provider. And who knows, maybe your data is physically stored in Siberia?
* Power outage may hit one of the many connection points between server and client.
* The provider may not be able to allocate enough employees to help you out, especially if a problem hits all the provider's customers.
Usually, SaaS contracts are based on historical performance, like "our network has 99.9% uptime". They should write "had", because if uptime drops, the customer has a problem, no matter what the contract says.
Businesses usually rely on the fact, that if something goes wrong, there is usually a workaround. However, broken cables in the Mediterranean sea, or censorship can block entire ranges of IP addresses. Court decisions may block DNS names. If your country loses the connection to your SaaS provider, can your company continue without?
The solution to all this is easy: Make sure that your company can continue, if your SaaS provider stops its operations with no warning.