SaaS vendor improves security by outsourcing data center

As a small start-up that helps customers predict financial performance, Inkling ran into a problem: The software-as-a-service vendor lacks the security and expertise needed to run a data center that makes its customers feel safe.

“We aren’t system administrators,” says Inkling co-founder and CTO Nate Kontny. “We don’t even have an office to put a server in and make sure it’s secure. We want to make sure no one is going to walk into an office, steal our computer and have all of our clients’ data.”

To solve the problem, Inkling outsourced its data center to Logicworks, a managed hosting and services provider that ensures safe storage of data by meeting SAS 70 Type II standards, which requires signoff from an independent auditor.

Inkling settled on Logicworks after three previous hosting providers failed to meet its long-term needs. The move helped Inkling win about three dozen customers, including a “big security firm” that refused to sign up until being assured its data was completely safe, Kontny says.

“[Customers] want to make sure we’re not hosting this thing in our closet or in some kind of unreliable, unsafe environment,” Kontny says. “We usually send them a security document that Logicworks prepared for us to make sure they’re confident the data centers are secure and dependable.”

As hosted software takes an increasingly bigger role in corporate America, the software-as-a-service vendors themselves are looking to outsource functions they can’t perform effectively, notes Jeffrey Kaplan, who runs the consulting firm THINKstrategies.

“The idea of these SaaS companies offloading their data center requirements is not an unusual one,” Kaplan says. “It’s very likely to [become even more common] for a couple of reasons. It is a more economical way for these companies to manage their operations, especially in a marketplace that has the potential to become more price-competitive.”

Secondly, hosting providers are doing more to meet rigorous standards such as the SAS 70 certification and the Payment Card Industry Data Security Standard (PCI DSS), he says.

Inkling helps predict potential risks, future sales and revenue, and other types of trends, for customers including the government of Singapore; O’Reilly Media; an unnamed gaming software company; a large unnamed bank; an ABC affiliate in San Francisco; the Chicago Sun-Times; and IDG’s LinuxWorld.

Inkling went through three data center hosting providers in 2005 and 2006. The first two were shared hosting providers, in which data might be hosted on the same box as dozens of other customers, Kontny says. Next, Inkling used a virtual private server in which the hosting provider divided storage among customers using the Xen hypervisor.

Inkling switched to Logicworks almost a year ago, after suffering through power outages and unreliable customer support from previous service providers.

With Logicworks, Inkling gets its own storage space rather than sharing with others, and is now acquiring extra storage with the vendor to get load balancing and failover capabilities. This will help manage extra traffic Inkling expects to materialize soon due to some new customers.