Recurring costs include per-user fees, platform charges, and partner per-user fees for added services. In addition, implementation consulting costs can be comparable to those for on-premises systems. Continue reading →
While IT executives who have embraced cloud-based business applications are usually pleased with their decision, interviews with IT workers who have done so reveal that there can be significant expenditures associated with SaaS. Recurring costs include per-user fees, platform charges, and partner per-user fees for added services. In addition, implementation consulting costs can be comparable to those for on-premises systems.
According to cloud providers, the actual benefits of SaaS are not in direct cost savings, but in the flexibility, agility, and scalability gained by moving systems to the cloud.
For businesses to make informed judgments on cloud service, they must first understand the relative costs of SaaS vs. on-premises systems.
To put it another way, is SaaS wasting your money?
These four hypotheses are not mutually exclusive. SaaS, for example, may save money (Theory 1) while still allowing vendors to profit from some of the savings (Theory 2). (Theory 3). Alternatively, while a hybrid of on-premises and cloud systems does not save money (Theory 2), it provides clients with greater versatility (Theory 4). Furthermore, depending on the SaaS service, the response may differ. For example, while cloud CRM may save money, cloud ERP does not.
Computer Economics has conducted a survey plugin to answer this topic. We’re searching for companies that have shifted most or all of their application portfolio to the cloud as part of our annual IT spending and staffing study. In other words, we’re searching for companies that don’t have an own data center or just have a small number of on-premises computers. We’re inviting these clients to participate in our usual yearly survey, and we’ll compare their IT expenditure ratios to our standard industry ratios for IT spending and personnel.
Computer Economics wants to be able to address three primary questions as a result of this research. To begin, do businesses that have largely adopted cloud computing spend less on IT than those that have not? Second, how is the IT spending mix different? Finally, how do clients perceive SaaS’s business value?
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