Zoho: Cloud customization cheaper than on-premise

Customization on cloud-based deployments can be cheaper than on-premise equivalents if companies choose the right components, according to Raju Vegesna, evangelist for Web productivity suite, Zoho.

Choosing a cloud deployment that relies on open APIs can help push down customization cost because it allows users to choose from a wider variety of third-party software development firms to implement software tweaks, Vegesna told ZDNet Asia.

Companies should further evaluate the ease of customization afforded by a service provider before signing on, he said.

"Some applications like CRM (customer relationship management) might need customization," he noted, adding that deploying apps that support open APIs would facilitate easier integration with other apps, compared with on-premise apps. "If companies want to avoid customization, they absolutely can."

According to Vegesna, 95 percent of Zoho's CRM customers use the product out-of-the-box.

Open source software company, Red Hat, recently warned of cloud "lock-in", which it said could drive up costs when companies want to switch service providers.

Various industry players have come up with several "standards" in a touted move to combat this lock-in. The APS (application packaging standard) model, Red Hat's Deltacloud project and the Open Cloud Standards Incubator (OCSI) group are some examples of efforts undertaken to facilitate interoperability in the cloud.

User licenses the main cost
Vegesna said one of the bigger expenses from cloud deployments typically encompasses user license, since the burden of infrastructure costs is taken out of the equation.

But, high user licenses can still turn some companies off. Singapore-based Digital Scanning told ZDNet Asia in an interview, the company discontinued its Salesforce.com CRM deployment because of the cost of user licenses and training time required.

It switched to smaller player, Zoho, deploying the vendor's SaaS CRM product for its 30 staff members, slashing its license fees by half, said a spokesperson. Extra features on Zoho such as shared calendaring and an e-mail marketing feature were additional cost-savers, she noted, adding that the company plans to stay on the cloud even as staff numbers grow.

Salesforce said in September it has 55 percent share of the global hosted CRM market.

A Datacraft Asia executive said in May this year that the company busted its initial budget allocated to fund its Salesforce.com deployment, because it had under-provisioned the amount needed to acquire user licenses. "Salesforce.com licenses aren't necessarily cheap," he said, advising fellow users to budget sufficiently for their cloud projects.

According to earlier reports, large companies that have adopted cloud computing may face escalating costs, for example, from growing bandwidth charges. A McKinsey report released earlier this year also recommended companies avoid SaaS, saying it was a more costly option for large enterprises, compared to maintaining their own data centers.