Entellium has filed for bankruptcy protection in an attempt to keep operations running while company assets are sold off and customers... well, while something is done with customers; what exactly that may be hasn't yet been made clear. As I posted in early October, the company's failure subsequent to the perfidious mismanagement of the now indicted CEO and Senior VP might be our first significant example of an active SaaS company going under with a sizeable customer base. What happens with those customers could be of considerable importance to the industry and overall perception of the safety of SaaS solutions.

According to an article in the Seattle Times, the company has been in negotiations with Intuit since late October to sell off its assets. It's not clear if Intuit would take over operations wholesale and continue running the service for the existing customer base, or if like Sixapart (which just purchased and shuttered Twitter competitor Pownce) it might close it down and dismantle the technology for its own purposes.

Come to think of it, Pownce probably had more subscribers than the 700 remaining with Entellium. Pownce users have been provided with relatively little notice, but some tools to retrieve their data at least. So far, the Entellium collapse has been handled with similar grace, particularly considering the circumstances; the company has struggled to remain in operation and to continue providing support to existing customers. What Intuit, or another potential buyer, might choose to do with the company's operations is a matter of speculation, but simply from a PR perspective a company such as Intuit has every incentive to make the customer transitions as painless as possible.

I think this bodes well for SaaS, on the whole. If the big fear over the delivery of Software as a Service is that the provider may suddenly go lights out and leave you stranded without either application or data, then this incident should help allay it. It's inconvenient and disruptive for Entellium customers, to be sure, but in the end probably not much more inconvenient than if a conventional software vendor had gone out of business and left them stranded with an unsupported package. The timelines are more compressed, but the actions required to resolve the situation are the same. If this is the typical pattern for SaaS business failures, then the industry remains in good shape to compete against conventional on-premises software delivery.