Recently, Scott Madden Management Consultants released an intriguing report (see link below) on whether it makes more sense for companies to “buy” on-premise software or “rent” their technologies through a SaaS vendor. We found their report to be spot-on in many aspects, but in regards to companies seeking accounts payable automation and accounts receivable automation solutions, we have a different view:
We disagree with the firm’s notion that customizing in a SaaS platform is “more difficult than on-premise software.” As SaaS has evolved, many vendors include in their platform built-in best practices. Additionally, some vendors (DataServ included) offer a unique approach (SaaS + services) that provides additional tailoring which would include the ability to customize workflow, general ledger accounts and names, and other unique fields.
Many clients find this tailoring plus best practices approach to be a significantly less expensive solution to their needs.
Total Cost of Ownership
While we agree that total cost of ownership (TCO) is a viable metric to compare the benefits between these two options, we find that some of the costs people don’t include between the SaaS + services model and the on-premise software model concern not only the start-up and initialization, but also training and ongoing support. For example, SaaS + services entails Tier 1 and Tier 2 level support, as well as user administration, that is provided throughout the full document lifecycle. These services are now no longer a company’s responsibility, whereas on-premise software does not eliminate these costs. This should be factored into the TCO equation.
Particularly if you are operating in an international environment, laws on privacy, encryption, how documents are handled and processed, where they are stored, etc. can change from country to country. Therefore, it makes sense to rely on credible vendors to help mitigate this risk. That’s where SaaS can separate itself from on-premise software. Because many SaaS vendors deal with multiple clients operating around the globe, they will have already addressed many of these country specific laws and regulations. Trying to climb down the rabbit hole of dealing with international laws on document storage, encryption, etc. yourself with on-premise software isn’t the best option for most organizations.
Scott Madden’s report is correct when it says that “SaaS providers must comply with strict security standards that exceed those of their customers.” However, it’s about more than just safety and security, it’s also about disaster recovery, which the report doesn’t touch on. For example, DataServ continuously reviews, updates, revises and tests its disaster recovery procedures. We submit to annual SSAE16 Type II audits of our processing procedures and systems to ensure that operations are following standards. Any business seeking a SaaS vendor should make sure their disaster recovery procedures meet these rigid standards.
In summary, there is an overarching notion that we and Scott Madden Management Consultants agree on: While cloud computing may not be the answer for every organization, its speed, flexibility, and lower costs make it a very attractive alternative to conventional software.