02 Dec 2009, Smartstream , Risk magazine
Choice is good. For example: The choice between software provided as a service and software installed on site, owned and maintained by the firm. Making the right choice, however, involves comparison and the basis of comparison has to be clear for choice to be meaningful.
The main benefit of software that is provided as a service is its ability to lower the Total Cost of
Ownership (TCO). TCO, the all-in cost of owning and maintaining an application over its lifetime,
should be one of the main criteria for choosing the method of application delivery that is right
for your organisation.
Yet many decision makers - whether from the business side, IT or purchasing - don't have a clear
understanding of TCO or how to define its underlying components.
This paper sets out to put TCO in context within the overall purchase decision for a new reconciliation application. We provide an overview of Software delivered as a Service (SaaS), describe how this delivery method attracts economies of scale that benefit customers, and then define the terms of TCO so that firms considering TLM OnDemand have a sound basis of comparing alternative delivery methods.
The SaaS model is not for everyone. If your firm has a unique reconciliation business process, needs significant customisation, complex integration or an enterprise implementation, an on premise installation may ultimately be better for you. Still, depending on your individual firm's situation, the TLM OnDemand TCO savings can be dramatic: In many cases between 100% and 150% of the comparable on premise software licence amount over a 3 year budget horizon. With this range of savings, it's no surprise that the SaaS model is claiming attention. This paper explains what's behind the numbers.