The ROI of SaaS is the name of the article written by Liz Herbert and Jon Erickson for Forrester, an independent research company. Forrester proposes a model to evaluate the long-term investment of SaaS; this model is called Total Economic Impact (TEI) and considers benefits, costs, and risks.
I learned about this article by the time we were talking about on-premise, hosted and SaaS technology in class, so I wanted to share with you that I found consistency between our discussion in class and the findings from Forrester. The main benefits of SaaS are fast deployment, better user adoption and reduced support needs. I am familiar with ADP because I use it to do payroll at work and I found it easy to use, whenever I have a question I call them and they are there, I have no complains; however I do not know anything about the cost.
Regarding implementation costs, SaaS costs are significantly lower than those for on-premise alternatives. Up-grades costs have to be factored in the analysis too; SaaS offers seamless and frequent updates as part of the subscription, while on-premise solutions put you on a place where you have to make decisions every time there is an update, does the organization need it? Can the company afford it? In my experience, what I see that happens is that these decisions are postponed most of the times and the employees end up working with old versions of the software.
The last category included in the TEI is the risk involved in the decision of taking the SaaS alternative. These researches highlight that moving to SaaS does not guarantee retirement of hardware or people resources and softer benefits around adoption, training, and scalability require planning and monitoring.
Definitely the answer to whether SaaS is a good investment or not depends on the needs of the company plus the analysis of benefits, costs and risks involved. Remember, it is very important to read the contracts and to ask questions like who is going to support me in a downtime?, when?, are there extra charges? Are there browser specs? etc…
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Hey Lilian,
ReplyDeleteThat was really helpful info. by you. Your blog clearly distinguished the differences. Thanks!
Hi Lillian, Thanks for your post. It was good information after our class discussions.
ReplyDeleteAmidst all the research and cost benefit analysis comes a decision from the corner office (usually by an outdated Baby Boomer) which is not what we want to hear. The challenge is getting this generation on board or heck maybe offer early retirement! OK, that did not sound nice...sorry.
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