PCCW Solutions Blog

Make a Smart Choice: SaaS vs On-Premise
2016 Feb 18 / By Joseph Au Yeung


In the cloud and digital age, business owners have a much wider choice of options on running their IT systems. While a lot of people can understand the value proposition of Infrastructure-as-a-Service (IaaS), the adoption of Software-as-a-Service (SaaS) has been much slower in the market.

Many customers still prefer to own the software on premise instead of using SaaS, because they think it is cheaper to buy the software once and for all. But is that really true?

In most cases, they only compare the initial software licenses fee without paying attention to the Total Cost of Ownership (TCO). Besides the one-time software license fee, they seem forgetting about the costs related to server hardware, operating system, database, backup equipment, customization effort, daily support, etc. If all these are put into perspectives, the one-time software license cost just represents 20-30% of the TCO in a 3-5 year span. If you’re interested to know more, you may refer to the TCO calculator provided by Software Advice, a leading software comparison resource.

So, is TCO the only consideration for SaaS adoption? Definitely not. There are at least three more areas you should consider in the on-premise vs SaaS scenario.

The first one is“opportunity cost”. When a business pays a large upfront cost for a software solution, it no longer has that cash available to grow the business. That money could be spent on marketing to attract more customers or on sales people to help grow more revenue.

The second thing is about core competency. If you acquire some software and implement it on-premise, this is often an automation reflecting the best way you know how to run the business. On the other hand, a SaaS solution usually comes with templates customized for a particular industry which is indeed a refinement of the business process by implementing the software for tens, or even hundreds of time in the past. By deploying SaaS solutions, it gives the business a chance to learn and elevate their process to the “industry best practice” standard.

The last but not least thing is about “data”. Customer data has become the single most important asset in the 21st century for a company to survive. If there is any natural disaster where your on-premise equipment is located, will you suffer from any loss of data? Even if you are putting the equipment in a “carrier-grade” data center, who is going to ensure your data will be back up regularly? Are you willing to spend the extra money to store the data in multiple locations to cater for a disaster? If you are concerned of these possibilities, then SaaS is an option for you.

Visit our “Infinitum” to find out how PCCW Solutions can help you deploy secure and comprehensive SaaS solutions.

Joseph Au-Yeung
Vice President, PCCW Solutions

With more than 20 years of experience in the ICT industry, Mr. Au-Yeung is responsible for the business strategies development of cloud-based services and security solutions. Mr. Au-Yeung holds a Master Degree in Computer Science. He is also a certified Project Management Professional (PMP) and Certified Information Systems Security Professional (CISSP) with IT Service Management (ITSM) certification.