3. Data Regulations: Each jurisdiction around the world has slightly different approaches to the regulation of data privacy and the Australian Law Reform Commission has recently released a report suggesting significant strengthening of Australia's data privacy regime. Therefore it is important that customers understand where their data will ultimately be stored and by whom so that they can ensure compliance with Australian privacy and also record retention regulations.
Many SaaS providers work on the basis of centralised infrastructure that is not based in Australia. The customer must ensure that contractually the provider is bound to comply with Australian privacy laws before allowing the data to be exported. The issue is further compounded if the SaaS provider then uses a third party to do the storage of the data.
Such is the complexity that EMC announced recently that it is having difficulty choosing a location to build the data centres to run its storage-as-a-service offering because of differing privacy laws across the world.
4. Data Security: The customer needs to get comfortable with the level of security provided by the SaaS provider and the process in the event of data leakage.
Further, laws in other countries can allow the governments and intelligence agencies of those countries access to the customer's data. For example the US Patriot Act requires US companies to hand over all customer data held by that US company upon request by the relevant US agency.
5. Liability: Generally speaking the providers of free SaaS applications do not accept any liability for any errors in or losses caused by the service. It is important to review the terms and conditions carefully on this point. In the case of paid services, the providers generally will accept some degree of liability. Sometimes this is limited to credits which can be applied against future fees due.