This document educates end-users and decision makers on Software-as-a-Service (SaaS), where it differs from traditional software, and what the key benefits are when deploying SaaS applications. In addition, this document also provides the reader with a comprehensive look at the Total Cost of Ownership (TCO) analysis any decision maker should complete before making a choice between a SaaS or a traditional software deployment.
Software-as-a-Service;
A Comprehensive Look at the Total Cost of
Ownership of Software Applications A White Paper Prepared by the Software-as-a-Service Executive Council September 2006 Table of Content 1 The SaaS Executive Council....................................................................................... 1 1.1 Mission................................................................................................................ 1 1.2 Contributors ........................................................................................................ 1 2 Executive Summary.................................................................................................... 2 3 Definitions................................................................................................................... 4 3.1 Traditional Software Model................................................................................ 4 3.2 On-Demand, Software-as-a-Service (SaaS) Model ............................................ 4 3.3 Single-Tenant vs. Multi-Tenant Architecture..................................................... 5 3.4 SaaS vs. ASP....................................................................................................... 5 4 What Are the Requirements that Drive the Acquisition of a New Software Application?........................................................................................................................ 6 4.1 Introduction......................................................................................................... 6 4.2 End-User Requirements...................................................................................... 6 4.3 Business Requirements ....................................................................................... 6 4.4 Company/Corporate Requirements..................................................................... 6 4.5 Operational and IT Requirements....................................................................... 6 5 Core vs. Context Software Applications..................................................................... 8 6 Key Arguments in Favor of SaaS Applications.......................................................... 9 6.1 Making the IT Budget Go Further ...................................................................... 9 6.2 No Underestimation of People Services ........................................................... 12 6.3 SaaS Allows Better Growth Management ........................................................ 14 6.4 Accountability of the SaaS Vendor................................................................... 15 7 Cost Drivers in the TCO Analysis ............................................................................ 16 7.1 Capital Expenses............................................................................................... 16 7.2 Design and Deployment Costs.......................................................................... 16 7.3 Ongoing Infrastructure Costs............................................................................ 16 7.4 Ongoing Operations, Training and Support Costs............................................ 17 7.5 Intangible Costs ................................................................................................ 18 7.6 Summary........................................................................................................... 19 8 The TCO Calculation................................................................................................ 21 8.1 Moving Away from "Owning" Software.......................................................... 21 8.2 The Elusive Break-Even Point.......................................................................... 21 8.3 TCO Calculator................................................................................................. 22 9 Case Studies.............................................................................................................. 23 9.1 Circle L Roofing (Intacct Corporation) ............................................................ 24 9.2 EquaTerra (WebEx Communications).............................................................. 25 9.3 Platinum Hospitality Management (Intacct Corporation)................................. 27 10 Bibliography .......................................... [download for more]
