SaaS inSights

Blog Options
Showing articles with label on-premise. Show all articles

On-premise vs. SaaS, which is right for you?

by inContact Team on 03-23-2009 06:04 PM

This is one of the more interesting questions asked of me,  SaaS or on-premise, which is better?   This is one of those classic consultant questions with a classic consultant answer..."it depends." 

 

Every business is unique and there are several factors to consider when trying to decide "which is better" for you.  But there are a few factors that seem to really separate the field, 1. Money , and 2. Management.   Obviously there are more factors to consider, but these two usually help to really put you on one side of the line or the other to start out. 

 

Money

This factor basically boils down to your access to capital for spending on a new system.  If you have the money up front to spend on a major system, then access to on-premise solutions isn't out of your reach because you have the money to spend up front.  One single investment in the system and then you can start building it and putting it in place.  However, not everyone is budgeted for a major capital expense.  In that case, you will find many businesses who opt for the SaaS model because it allows them to buy the system as cash flow in operations allows them to spend. 

 

Management

This factor is meant to separate those who are capable and have the resources to manage a major system on their own from those who don't have the technical resources to keep a major system running.  This can be a big deal for some businesses.  You are about to take on the responsibility of acquiring and building, and maintaining a major system on-premise.  This means when it goes down, you are responsible for getting it back up.  This means that when you need to upgrade the OS with security patches on Tuesdays, you are responsible.  Not everyone has these kind of resources.  There are plenty of people who just want the system to provide the business benefit and can't afford the people to maintain a major system.  If you can afford the onsite resources and are willing to take up those responsibilities, on-premise may be for you.  If you are interested in having experts maintain and manage the system and just want the business benefits...you are probably looking for SaaS.

 

This is just a starting point for deciding what you want.  I have plenty of examples where companies that have plenty of money and IT resources opt for SaaS for other reasons.  And, as surprising as it is to me, there are companies who really can't afford the IT resources, end up buying a budget on-premise system to maintain for themselves. 

 

Please share the simple factors that you find are clear markers for decided on-premise vs. SaaS.  Drop me a note at greg.smart@incontact.com.

Labels:
0

Debunking SaaS Myths

by inContact Team on 02-19-2009 01:35 PM - last edited on 02-19-2009 01:40 PM

Gartner VP Robert P. Desisto has recently publish research entitled, "Fact Checking: The Five Most-Common SaaS Assumptions" to help people understand more about Software as a Service and debunk potential myths.  Of course, I couldn't let this one go without commenting on it.  So here it goes:

Assumption 1:  SaaS is less expensive than on-premise alternatives.  Gartner claims that this is true for the first two years, but may not be true from an accounting perspective after year two since equipment is depreciated over time.  

From the SaaS perspective I found this interesting because while it may be true that depreciation reduces the accounting perception of cost of ownership, we need to remember why depreciation exists.  Depreciation reduces the value of the on-premise alternatives because of usage and obsolescence.  The only way to deal with usage and obsolescence with on-premise alternatives is continued investment to keep it running and not be obsolete.  SaaS infrastructure is continuously updated to keep up with usage and SaaS software is continuously updated to stay relevant and not be obsolete.  Any SaaS vendor worth their market cap operates in a way to ensure that you won't be on an "outdated" SaaS application or infrastructure at risk of breaking because of heavy usage.

Assumption 2:  SaaS is faster to implement than on-premise alternatives.  Gartner reminds us that large and complex implementations will reduce the gap between fast SaaS installations and longer on-premise installations.  This is in large part because the customization necessary is the same for both on-premise as well as SaaS implementations.

From the SaaS perspective I have seen some very large implementations that take time to integrate and tailor to meet the customers needs.  However, there is an important thing to remember.  When an on-premise implementation needs a new feature or something fairly significant that isn't already accounted for in the SDK or API, the development cycle to get that update is very long.  When a SaaS implementation needs a new feature or something significant that isn't already there, the development cycle to get that update is usually shorter since SaaS cycles releases more frequently.

Assumption 3: SaaS charges you only for what you use.  The fact checking done by Gartner found that the vast majority of SaaS pricing actually requires a contract regardless of how much you use.  

From a SaaS perspective I can say that the pay-for-what-you-use model does exist and it is available.  However, I have found that our customers are driving the demand for a pricing model that is more predictable and steady as well as contracts that bring the partnership together with terms as opposed to a month-to-month relationship.  SaaS vendors are happy to fulfill the customer's desires in both pricing scenarios.  Frankly, having a contract in place helps SaaS vendors with capacity planning and helps the customer feel secure in the long term viability of the solution.

Assumption 4:  SaaS does not integrate with on-premise applications or data sources.  Gartner found that this simply not true.  

SaaS is very capable at integrating with on-premise applications and data sources.  This is one of the significant reason why I believe that SaaS has had such a re-birth from the old ASP days and is winning today.  Integrating through batch processes or real-time web services are both viable and widely available solutions for tying SaaS directly into legacy on-premise applications.

Assumption 5:  SaaS is just for simple installations with basic requirements.  Gartner found that this is not true either.  

SaaS applications are very strong and are usually happy to compete head-to-head with even the most mature on-premise alternatives.  In fact, SaaS vendors are keenly aware that the sustainable SaaS applications are those that meet the needs of even the most complex customers and can fit into business processes that involve more than just the SaaS application, but also integrating into other SaaS and on-premise applications.

Have you found any of these assumptions to be true or false for yourself?  I would love to hear your story.  Drop me a note at greg.smart@incontact.com.
Message Edited by GregSmart on 02-19-2009 01:40 PM

Labels:
0
Follow us on...
About the Author
  • Product development professional with 17 years experience making products dance for customers.
Announcements
Let us know how we can help you: ProductManagement@inContact.com
Labels