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Business

The Cost Difference Between On-Premise and SaaS

The SaaS vs. On-Premise cost differential turns out to be quite significant. Large enterprises are starting to embrace SaaS applications for more than cost reasons.
Written by Brian Sommer, Contributor on

A couple of weeks ago, I did a televised webinar with Bob Evans of InformationWeek and two major CIOs: Andy Schlei of Sony Pictures Entertainment and Kate Bass of Valspar. Workday, a SaaS HR and Financial vendor, sponsored the event.

Brian Sommer, Andy Schlei, Kate Bass, Bob Evans

Brian Sommer, Andy Schlei, Kate Bass, Bob Evans

I have listened to a lot of webinars, earnings calls and conference calls in my career. It's very rare to attend one of these and hear a lot of questions get put before the presenters. Sometimes, this is due to the desert-like nature of the dry material presented. Sometimes, people don't like to ask questions of others in a public setting. Sometimes, it's because everyone's in a hurry to get back to work. And, sometimes it is because the material is something everyone already knows.

This webinar was interesting in that it generated an exceptionally large number of questions. I'd love to say it was because of the sparkling repartee amongst the panelists but it probably was due to be subject matter. What did we discuss?

The webinar was on the inroads that software as a service (SaaS) has made into large businesses.

I recently interviewed a number of CIOs with very large corporations. Each of these companies has implemented a software as a service application software solution. Of the many things I learned in this effort, I was most taken with the financial results businesses were achieving via software as service. To the one, these CIOs reported their SaaS solutions had a total cost of ownership that was one third to one half the cost of an on-premise solution. The biggest cost savings actually came from the reduction in manpower required to maintain the applications in-house. There were also considerable savings from other areas such as reduced or no capital expenditures, reduced implementation costs and other areas.

I produced a white paper as result of those interviews with large company users of HR, Finance and CRM SaaS solutions. You can get a copy of that white paper and/or see a replay of the webinar at this Workday link.

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