SaaS v.s. On Premise

A software selection process is often described by project managers and business analysts as one of the most difficult endeavors an organization can undertake.  The costs alone of bringing in vendors, pulling employees off their current job duties, sitting through canned presentations, comparing notes, and selecting a product creates such an enormous burden that “No Selection” is often the conclusion to the process. 

 One method of overcoming “No Selection” is to make the business decision either to subscribe to a vendor that offers Software as a Service (SaaS) or to purchase from a vendor that offers an On-Premise Installation prior to the evaluation.  The selection committee will sit through fewer product demonstrations, focus their time and efforts on constructive dialogue with the vendors, and shorten the decision making timeframe.

 Making the decision for a SaaS based or an on-premise based solution is difficult for many organizations as they have no decision making framework. We polled a group of IT Executives to uncover the factors used in making the decision whether to subscribe or to buy a software application.  We then grouped those factors into two buckets to create a framework for decision making.  Our results are as follows:

SaaS v.s. On-Premise:  A Decision Making Framework


(SaaS) is for Companies that Have:


On-Premise is for Companies that have:
ü  A Mobile and Disperse Workforce ü  Little to No Sales Force
ü  No Significant IT Investment ü  Significant IT Investment and infrastructure
ü  Natural Workflows ü  Specialized Workflows
ü  Web Based Integrations ü  Multiple Integrations to On-Premise Applications
ü  Little to No IT resources and support systems ü  In house IT resources and support systems
ü  Expense Budgeting ü  Capital Expenditure Budgeting
ü  A Culture that Requires Mobility ü  A Culture or laws that require in-house
ü  Multiple and Dispersed Offices ü  Centrally Located Offices
ü  Few Customizations

ü  Implications with Downtime

ü  Wide variety of Customizations

ü  No Implications with Downtime


Not surprisingly, the majority of the executives polled overwhelmingly stated that the SaaS v.s. On-Premise business decision should be made prior to the start of the evaluation process!


About Cameron Ackbury, CPA

Founding Director at DaggerFoil Group
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