Danger in the Cloud for CRM Software Users?

I just got back from a week out of the office, and I mostly relied on my smartphone to take care of client requests and to keep on top of the news. Sure enough, the week that I was away from my desk, one of the biggest tech stories of the year broke out:

Danger, the company that created the popular Sidekick smartphone, notified users that all of the data on their servers was mistakenly wiped out, during what should have been a routine system upgrade. Accusations are flying:

• T-Mobile, the U.S. carrier supporting the Sidekick, has offered service credits for customers who choose not to defect. They blame Danger for poor data handling procedures.
• Danger representatives have told users that they blame the vendor hired to manage their storage.
• The storage vendor claims that Danger is their first client that didn't have a comprehensive backup plan for critical user data.

Sidekicks aren't very common in the business world these days, unless you're a celebrity blogger. The hardware, revolutionary when it was released a few years ago, doesn't hold a candle to today's modern smartphones with loads of internal memory. The phones' lack of storage is why so much user data was on a central server in the first place.

However, CRM software users have been shaking in their boots over these events for a few specific reasons:

• Danger was purchased, a few years ago, by Microsoft. Essentially, Microsoft employees are now on record as having failed to back up critical customer data. Microsoft has been trying (and failing) to reposition Danger as a distant subsidiary instead of as a core business unit.
• Many CIOs now wonder whether Microsoft hosted CRM services can be trusted, since a "simple" service like the Sidekick could be so easily purged.
• And just about every CIO wonders how easily this could happen at the hosting provider for their own CRM applications. After all, "if it can happen at Microsoft..."

In my next post, I'll walk through some of the reasons CIOs might use this news to revisit the debate between hosted CRM and locally-installed CRM software...

(Follow this link to Part Two...)