Why SaaS?
- You want high level software without high start up costs
- You need to expense a monthly payment rather than make a capital purchase
- You want predictability of costs over time
- You want to add software, but do not want to add work to your IT department
- You require a rapid Return on Investment
- You require universal access to the application at anytime and from anywhere using a standard web browser
- You need worry-free software upgrades
- You want a highly flexible, customizable, and fully scalable solution that can adapt to your ever-changing business needs
- You want the easiest, fastest installation possible so you can be up and running quickly and reliably
- You want to quickly ramp up new business functionality without engaging in system integration and implementation costs
Licensed Software vs. SaaS Value Comparison
| Licensed Software | Software-as-a-Service |
|---|---|
| Pay licensing upfront (capital expense) | Pay-as-you-go subscription (operational expense) |
| Higher upfront costs plus annual maintenance costs | Lower upfront subscription costs (depending on number of users) |
| Cost for applications, maintenance, infrastructure and IT/application resources | Cost for annual subscription and minimal IT resources |
| Longer time required to install and configure applications (data redundancy, back-ups, security) | Faster implementation and time-to-productivity |
| On-going integration and feature upgrade costs; requires IT attention | Highly flexible and intuitive features typically with easier integration standards; requires no IT attention |
| Greater risk for users | Risk sharing with vendor |
| Hardware and software costs | No hardware and software costs |
The High Costs of On-Premise Software
Today's growing businesses spend a considerable amount of their budgets on software to help manage their overall businesses. Often, however; these businesses do not realize the huge amount of resources and capital it costs to run these software applications effectively. Resources such as; hardware, software, networking, operating infrastructure needed to support the applications, as well as the IT support and management staff. All this without considering the assumed costs of each. (e.g. On and Off-Site Server back-ups, Disaster Recovery, Server maintenance and upgrades, security, and others.)
Typically the incurred and recurring costs of On-Premise applications can well exceed the overall costs of SaaS solutions and aren't as effective. Generally the hardware costs comprise less than 15 to 20% of the total costs, and often overlooked in cost predictions is the cost of personnel required to acquire, set-up, maintain, and support these On-Premise applications.
Many of the application environments are far too complex to manage internally leading to out-sourced costs. (e.g. Integrators, Systems analysts and others.) SaaS Solution providers provide a consistent application environment - with all of the requirements met, from; operating infrastructure; to IT Support and management staff, to full continuity plans for disaster recovery and data redundancy.
- On-Premise solutions typically incur the following costs:
- Cost of database, operating system(s), third-party software, and other infrastructure software licenses (e.g. Most application deployments require both application and database level software applications)
- Cost of infrastructure hardware or hosting applications. Typically 2 or more servers may be employed. (e.g. Application and Database Servers)
- Recurring costs for infrastructure maintenance and upgrades (e.g. Operating System updates and upgrades, database upgrades, and general maintenance patches)
- Cost of data integrity such as on and off-site back-ups
- Cost of supplying and maintaining Disaster Recovery resources (Typically Disaster Recovery Plans require similar if not the same set of hardware and software licenses required for standard usage and deployment, as well as the appropriate staff and maintenance support and upgrades)
- Cost of IT staff such as database administrator or external IT systems support and integrators
- Cost of multiple applications, multiple support contracts
- Cost of customization (customizations that have to re-built with each new revision of the underlying software)
- IT costs associated with maintaining and upgrading separate applications (including test deployments prior to releasing application into production environments)
- Costs of training IT Staff on the latest or new technologies (data communications, operating systems, databases, web servers, etc.)
The Business Benefits of SaaS
Lower cost of ownership, state of the art versions of software (application), faster time to production, rapid user adoption, superior infrastructure and computing environments, and little to no IT staff and resource requirements - are distinctive SaaS benefits that companies which have adopted On-Premise applications cannot provide for themselves. This is in part due to the "sharing" which occurs in a typical SaaS environment - where the costs associated with a "complete" application are spread across multiple organizations.
- More rapid access to state-of-the-art technology
- Shift in focus to core business management, rather than putting too much attention on the computing environment
- More rapid time-to-production
- Improved security, performance, and availability
- Reliable access to data, anywhere, anytime
- Greater ability to scale as business needs change
- Lower cost of business solution ownership
- Predictability of costs over time
- Avoidance of technology lock-in
- Increased risk mitigation with better support for compliance