A Graphical Illustration of How SaaS Trumps On-Premises Software

We have pontificated often in this space as to why Software as a Service (SaaS) is superior to on-premsises software when it comes to financial process automation, but we have yet to find a way to illustrate a side-by-side comparison of these two options in graphic form as well as the International Data Corporation (IDC) was able to do in the image above.

As you can see, IDC’s research indicates that on-premises software (labeled as “in-house”) is nearly $2 million more expensive than SaaS (labeled as “’service provider’) over the course of 36 months – a cost differential of 174 percent. Even prior to the 12-month mark, the cost-savings of SaaS over on-premises software is already clearly noticeable, with SaaS hovering right at the $1 million mark while on-premises software is well into nine figures. Most notably, after three years there is a “third year software upgrade cost” with on-premises software that isn’t in play with a SaaS solution, which keeps providing network upgrades at no additional cost to the client. This is one of the many big benefits of cloud-based technology – the ability to provide ongoing upgrades at no extra cost.

There has been a widespread theory that buying and owning software is cheaper in the long run than paying a SaaS fee each month. However, those projections almost never take into consideration the additional people resources and costly upgrades that come with running on-premises software properly.  Even more egregious, but hidden, are the costs associated with NOT managing those ongoing costs well and allowing the system to get stuck and not upgrading it or improving it over time. These issues eventually add up to an even more expensive, painful problem – a large upgrade project or full replacement of the software! 

In addition to the cost savings, the SaaS solution demonstrates “measureable productivity gains” much sooner, while it takes on-premises software at least another six months to make the same claim. Indeed, faster deployment is another big SaaS advantage.

As we have written before, SaaS is also less burdensome on your IT department, easier to customize, and more secure than on-premises software. 

If you have any questions about this data and how it can apply to your financial operations departments, or if you would simply like additional insights into the advantages SaaS holds over on-premises software, contact us at info@DataServ.com.