As a web-based solution, the cloud absolves the organization of much of these requirements. Find a reliable solution provider, implement the solution custom-crafted to your specific needs, and deploy - no hardware purchases; no upfront software licenses; not even the need for in-house IT to manage the solution. Upgrades are automatic.
To be sure, the "higher-cost" myth can be the most difficult to debunk. In some ways, the recurring monthly or annual service fees of cloud-based solutions can exceed the initial cost of hardware or licenses. What are the ongoing costs for software, hardware and staff for an on-premise deployment?
But hard costs are only one metric. Beyond fixed (hardware and licenses) and human costs, prospective users must consider increased service levels being provided. We've argued before that functionality and security may be enhanced via the cloud.
Maybe it's best that each organization considering the cloud versus in-house establish some basic assumptions, and then weigh several factors to better visualize unique cost impacts.
For example, ask yourself the following:
Is technology a differentiator in my industry? If so, assume you'll have to replace PCs, laptops and software every two to three years. With SaaS, a sales rep with the right smart phone or a service technician with a tablet with a geo location app, can help reduce immediate and going-forward costs compared with outfitting them with more expensive - and less functional for the role - laptops and installed software.
What is my time horizon? Over how many years are we going to amortize - or even evaluate - the chosen solution? Some managers say they'll keep their software for 10 years, but they avoid three-year contracts. Longer terms can lower costs. Over 10 years, will subscription costs outweigh software maintenance costs? In longer terms, a perpetual license with cloud services may be less expensive than a pure play SaaS offering.
What's my need? Don't blindly heed the advice of others, even those in your industry. Your opposing conclusion may yield a competitive advantage.
When weighing the cloud, don't come to an immediate conclusion. Your decision should include a comprehensive perspective based on the complexity of the apps being outsourced and their ability to serve the intricacies of your business. The cloud's silver lining might be there. Just make sure it meets your needs.
