Is a Cloud or On-Premise Deployment Right for You?
Cloud applications have dramatically changed our market. Cloud applications deliver exciting advantages, but on-premise applications can be best for some organizations. As always, choice is good. Because having only one option isn’t an option! The key is understanding which option is best for your organization.
8 Key Questions to Consider:
- Do you focus on year 1 costs or a long-term TCO?
- What is the state of your IT resources?
- What is the nature of your system integrations?
- Does your organization have experience with Cloud?
- What is your history with Application upgrades?
- Rate your readiness for ‘out-of-the-box’?
- How are your users distributed?
- Are Cap Ex or Op Ex budgets more favorable?
The adoption of cloud computing continues to grow as on-premise experiences a rebirth. According to a well-known industry analyst firm, the ITSM SaaS model will continue to grow until 2015, but will level off to roughly 50% cloud and 50% on-premise deployments. Also, they are predicting 30% of organizations using SaaS will switch back to on-premise ITSM solutions by 2014. Hopefully these questions will help you make the best decision for your organization.
1. Do you focus on year 1 costs or a long-term TCO?
- Year 1 costs are lower with SaaS (50% to 75% less)
- Save money on servers
- Prefer annual subscription model
- 3+ year TCO typically favors on-premise
- Overall consulting costs similar
- Prefer perpetual license model
2. What is the state of your IT resources?
- Lowers requirement for IT services
- Data and application moved offsite
- System administration needs are reduced
- Upgrades managed by vendor
- Will require IT support
- Data and application are local
- Plan for local system administration
- Upgrades are do-it-yourself
3. What is the nature of your system integrations?
- Limited number of integrations
- Well defined and understood
- Typically static and one-way
- Need a number of integrations to other applications
- Evolving and complex
- Typically dynamic and bi-directional
4. Does your organization have experience with Cloud?
- Other Cloud application(s) in place
- Cloud understood and accepted
- Executive support for SaaS
- No Cloud application(s) in place
- CRM and ERP applications have been deployed on-premise
- Executive team see Cloud applications as a risk
5. What is your history with Application upgrades?
- Bad history with upgrades
- No current upgrade process
- Generally lacking in-house skills
- Good history with upgrades
- Established upgrade process
- The right skills available
6. Rate your readiness for ‘out-of-the-box’?
- Organization is ready to embrace standard applications
- Business is more standardized
- Bad experience with custom applications
- Applications tend to be more customized
- Business is highly unique
- Have aptitude to sustain customizations
7. How are your users distributed?
- Highly distributed user base
- More complex upgrade process
- Reliable internet access
- Centralized with fewer locations
- Upgrades more localized
- High quality servers
8. Are Cap Ex or Op Ex budgets more favorable?
- Operating Expense budget preferred
- Smaller financial impact in year 1
- Annual subscription preferred
- Capital Expense budget preferred
- Larger financial impact in year 1
- Purchase of perpetual licenses
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