Burned By Gmail Outage? Google Will (Almost) Buy You a Postage Stamp. Apparently the SLA for Google Apps will get you 3 days if uptime dips below 99.9% for the month. At $50 annually for the service, that's $0.41. (Google has decided to pay out 15 days credit, anyway.)
Service credits from the SLA:
|Monthly Uptime Percentage
||Days of Service added to the end of the Service term, at no charge to Customer
|< 99.9% - ≥ 99.0%
|< 99.0% - ≥ 95.0%
That's $0.41, $0.96, and $1.91 credit for over 43.2 minutes, 7.2 hours, and 36 hours of downtime, respectively. I realize that across an entire business, that could potentially be a thousand credits or more, but what business would see a $1.91 per user credit as adequate for 36 hours of downtime in a month?
From these two register articles, Google's email service goes down and Google blames Gmail outage on data centre collapse, it looks like the downtime was about 2 hours and 15 minutes, but there are some reports of outages as long as 4 hours.
There is a nice article on High Availability on Wikipedia to compare uptimes on a weekly, monthly, and yearly basis.
What’s Your “Web Service Tanked” Contingency Plan? | Social Media Explorer. I commented on this on the site as well. My key concern is not the service going down, but being at the whim of a "free" service that may decide to automate some processes like abuse handling. I'm still reliant on external hosting, but I am in control of recovering my content if backed up properly.
I was severely burned by a round of Blogspot automated spammer purging. I was writing a simple blog, hosted by Blogspot, to track my progress toward a certain running goal. I created a decent amount of content which linked back to my running logs. Somehow, I was locked out of my site for several weeks--with no access to my own content, under suspicion of being a spam blog. It took multiple tries through several channels with Google to get my blog released.
That was the nail in the coffin for Blogspot hosted blogs for me. For a time, I continued to use Blogger for FTP-based blogs, but service outages and lack of functionality finally got to me.
There was enough pain for me in a completely non-critical application that I can't fathom SaaS without a contingency and a stringent SLA for the SaaS application. This experience has made me aware of the inherent risk in relying on a third party (especially if through a free service) to meet your software needs.