It is almost a given that going the SaaS route for enterprise software is the best way to go. In the case of document management packages, whether you should or shouldn’t really depends on what you need. To assess that, there are a few things that need to be considered.
In a recent paper from Cabinet NG (news, site) on whether enterprises should consider SaaS or on-premise, Jon Clark outlined some of the things enterprises need to look at before committing to anything.
In the case of Cabinet NG, like quite a number of vendors in the space, it provides both SaaS and on-premise document management software, so whether Clark, who is VP of Sales at Cabinet NG, comes down on one side of the argument or the other, doesn’t matter.
Investing in Document Management
The traditional route for enterprises buying document management is to buy the software after looking at its IT infrastructure, its budget and business requirements, and install the software on the enterprise servers and desktops.
With SaaS, a new alternative is offered that, on the face of it, looks like it might be considerably cheaper, easier to manage, require less maintenance and less storage space than on-premise deployments.
There are five areas that need to be considered first, with subsidiary issues after. They include:
In much of the discussion that has gone on around SaaS, it is taken as a given that SaaS will necessarily be cheaper than an on-premise deployment.
The assumption that SaaS saves enterprises money is based on a short-term view of the issue based on the fact that the initial outlay for SaaS is considerably less than it is for on-premise. But there a number of things that need to be considered here.
For on-premise deployments you need to consider server requirements and whether existing servers will be able to cope with a new application.
While many DM packages will run on MS Windows Server, you still have to ensure that you have the required version to run the application, consider whether the new application requires a dedicated server, or whether it can be located alongside other applications, whether you need server updates or even new servers. You also need to check whether the OS on your workstations supports the new package.
Assuming that your servers can support the new application, there are still maintenance costs to consider, Clark says. There are costs associated with managing internal servers, backing up data and updating software.
Clark says that the cost of updating software runs at between 15% and 25% annually of the original purchase price of the software, while ongoing support -- although not essential -- is still considered desirable.
With SaaS, these issues are all covered by a monthly fee. Taking an example of a 10-user system over a five year period, Clark offers the following scenario:
- Initial consulting and set up for on-premise and SaaS is US$ 2,000.
- Purchase price for on-premise e is $1,000 per user including maintenance and support calculated at 20% starting year 2.
- If a new server is required, add another US $5,000 for this example.
- SaaS pricing for the example is US$ 90 per month per user.
- Internal IT personnel cost are not included in this example.
In this example, SaaS, as the chart below shows, works out more expensive. However, it is for illustration purposes only, and there may be other costs included in the on-premise version.
Document management: on-premise v SaaS
With SaaS, the vendor does everything, including server preparation, configuration and software initialization, with the enterprise only having to agree the terms.