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Andrew King, WebSan Solutions, Inc.

Are You Really Considering Total Cost of Ownership (TCO) When Evaluating Software as a Service (SaaS)?


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These days, everyone is throwing around buzz words like “Software as a Service” or “Hosted” or “Cloud”, but how do I really go about calculating the total cost of the solution and whether to choose “the Cloud” or on-premise (traditional) solutions?

There are a number of cost figures to include :

1.       License fee

2.       License fee for upgrades

3.       Maintenance costs

4.       Ongoing support costs (professional services/consulting)

5.       Hardware costs

6.       IT Infrastructure costs (network, etc)

7.       IT Personnel support costs (internal)

8.       Implementation costs (external)

9.       Implementation costs (internal)

Most organizations, when looking at SaaS vs. On-Premise only really look at items 1-5, but rarely dig deeper into the other categories of expenses.

It is in those last four areas where the large differences between SaaS and On-Premise come to light. If you own a small business with only 20 or so employees, then perhaps you don’t even have anyone internally who can perform system backups or upgrades regularly. If you run a large organization, perhaps supporting your IT infrastructure takes your focus off of more important things.

Some organizations may only run their head office on a DSL or Cable Internet connection; the type of solution that would never work for anyone accessing an Enterprise software application remotely from outside head office. The monthly cost of upgrading to a T1 or better connection may be prohibitive.

In addition to the costs listed above, the intangible costs of focusing on IT backups, upgrades, and infrastructure rather than spending money and resources on growing the business or satisfying customers can be even more taxing to an organization.

We offer solutions in Hosted Dynamics GP and On-Premise Dynamics GP. We can help your organization make the right decision and determine the best course of action, taking all costs and factors into account.

For more information, contact WebSan Solutions.

By Andrew King, WebSan Solutions Inc. a Canadian Microsoft Dynamics Partner

One Response to “Are You Really Considering Total Cost of Ownership (TCO) When Evaluating Software as a Service (SaaS)?”

  1. Great article. Whether the delivery model is on premise, hosted, or SaaS fundamental ERP advantages and challenges still apply. ERP makes for an expensive custom solution. Please refer to the following article for additional information:

    http://gbeaubouef.wordpress.com/2010/12/22/erp-expensive-custom-solution/

    Best Regards
    Brett