Ask Wendy - September 2006

• Selling the On-Demand Model to IT

  Wendy Close Sep 25, 2006

  In September, the Software & Information Industry Association (SIIA) published a new white paper that takes a comprehensive look at total cost of ownership (TCO) of software applications. The white paper provides a true "apples-to-apples" TCO comparison between the traditional on-premise model and the Software-as-a-Service (SaaS) model.  The research reveals that common TCO analyses underestimate or omit the people resources and other costs necessary to run and manage traditional on- premise software applications. Since SaaS service fees typically include most, if not all, people and infrastructure costs, many TCO comparisons between the two models are incomplete.  The white paper identifies the common cost factors most likely to be underestimated or omitted when comparing the TCO of traditional software versus SaaS. These common costs (which are included in the SaaS service fees) are:

  1. Hiring and training certified personnel to install, manage and maintain the on-premise software applications
  2. Staffing a help desk to provide training and support to the end-users of the on-premise software applications
  3. Building and maintaining the redundant network and hardware infrastructure necessary to operate the on-premise software application

  For on-premise software, the white paper concludes that when factoring people cost, it is estimated that companies spend up to four times the cost of buying the software itself. With many internal IT departments overworked and overloaded, a strong case can be made that the SaaS delivery model could alleviate headaches such as capital expense, end-user training and others. The white paper also includes a TCO calculator that incorporates all the cost variables discussed. Using the calculator enables companies to make better informed decisions when considered SaaS or traditional software deployments. For a copy of the white paper visit: Software-as-a-Service; A comprehensive Look at the Total Cost of Ownership of Software Applications.

  As a pioneer in the SaaS arena, Salesforce.com has been help more companies deliver better products and services, at lower costs than any other CRM SaaS vendor. You can learn more about Salesforce.com's award-winning CRM Software-as-s-Service applications by visiting www.salesforce.com.

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