Software Cost

Generally, SaaS is the most cost-effective option from a software perspective when considering the short term.  However, usually within the 3rd full year of deployment, an on-premise model becomes more cost effective from a software standpoint, even when considering ongoing software maintenance and support costs.

Software Maintenance & Support

Generally, these annual costs are included with a SaaS subscription, while they are separate costs in an on-premise or hosted deployment.  These costs vary by provider and software purchased, but as mentioned above, even when added to the original software cost of an on-premise or hosted model, are generally offset in the TOC (Total Cost of Ownership) within 3 to 4 years of deployment.

Hardware Purchase, Maintenance, & Support Cost

These costs must be considered in an on-premise deployment while they are not relevant in a SaaS or hosted deployment.  Depending on your specific situation, the necessary infrastructure may already be in place with little to no additional investment necessary.  However, when combined with possible staffing costs, if you do not have the necessary infrastructure in place, SaaS or Hosting may become the most beneficial option.  Hardware requirements will vary by system and configuration, but it is likely that at least an additional 1 to 2 servers and associated storage may be required.

Staffing Cost

This cost can be analyzed just as the above Hardware costs.  In a SaaS environment the responsibility for maintaining the system resides with the software provider.  This is also the same in a fully hosted environment.  However, in an on-premise deployment, or in a hosting scenario where the client is only leasing server space, you need to insure proper staffing and expertise to maintain the system.  Again, if you already employ a competent IT staff, there may be little to no additional investment necessary. Maintenance and support time will vary, but it is realistic to expect devoting at least 10-20 hours a month to maintenance and support requirements.

Software Implementation

Deployment choice has very little impact on implementation cost.  Regardless of deployment, the solution still needs to be implemented through training, piloting and process engineering for your specific environment.  The only variance in cost between SaaS and an on-premise or hosted environment are installation costs, which generally do not apply in a SaaS deployment.  Installation costs are generally less than 5% of overall implementation costs.