Do you sound familiar with the situation explained below?
You started out with a Custom Off-the-Shelf (COTS) CRM product suite, but your user adoption changed dramatically, owing to Scale and Technology Transformation, thus leaving you to think over to a new deployment model. Or perhaps, you purchased your Point of Sale (POS) system many years ago and now decided that it is time to switch to mobile network retail solution. The cost of maintenance could be high or you feel it is time to minimize CAPEX. All of these situations put you in a position to find the need of solving heavy infrastructure concerns and thus make business operation lean, which at the same time must not disrupt the business continuity. Often, an overwhelming task.
Any business transformation is not easy for organizations to adopt and there are pain points associated with it. Be it the On-Premise products/applications behaviour that has gone outclassed or the products/applications dispensability – that require changed approach to position the organization competitively. For specific business functions with high need of control over such products/applications and data even at the price of higher management efforts and slightly more time to market, organizations are accelerating towards the possibilities of cloud adoption. Thus cloud has become a serious business proposition slab from products perspectives.
When deciding to implement a new business management product, there are many factors that need to be considered. Up until the beginning of this decade, choice of deployment, how to deploy and where to deploy – was NOT one of these considerations. Nowadays, most evaluations of solution / product / application platforms include the question of – whether to model the platforms “On-Premise” or “On-Demand”.
Most enterprises are tending to evaluate if putting the buck on hosting applications on the cloud is the way forward or not. The answer to this difficult question really depends on the technology landscape of the company and the complexity of operations. For example, a new age start up or an ISV may consider a “Cloud First” model, where all the infrastructure, applications and products may deem suitable to be migrated to the cloud. This greatly simplifies the IT model for that company and allows a provision of leveraging a pay-for-consumption based model. In turn, it results into the galvanization of resource costings, achieving a business flexibility in the initial stages of start-up formation, thus relieving a surplus of cost for low hanging fruits. However, enterprises with legacy applications and investments in existing datacentres should evaluate key considerations before moving to the cloud model.
I underline the below top five considerations associated with product suite selection and how both On-Demand and On-Premise deployments impact upon them. These considerations are broadly categorized as the following:
- User empowerment
- Investment timeline and Total Cost of Ownership (TCO)
- Data sensitivity
- Availability of internal IT resources
There are always two sides of the coin while arriving at a business decision of: if in-house infrastructure model will suit for business applications or a SaaS model.
Where expensive take, long implementation times, debilitated user augmentation, inflexible licensing plans might be taking the sheen off the On-Premise journeys, that may have left vast quantities of product suites sitting unused on shelves; In contrast, SaaS journeys provide a ‘pay per use’ subscription model, no IT infrastructure to maintain in-house, better user uptake and shorter deployment periods – could appear a bright oven to cook.
Where security and uptime concerns and criticisms about the lack of customisation on SaaS model derive some amount of restraints, On-Premise models can be configured to fit exact business requirements and might suit better large organizations that have complex integration needs.
Where the SaaS model eliminates the need for provisioning of systems upgrades (with upgrading the entire technology stack – the database, the servers, the operating system, the system integrations, etc.) for the company against the service provider – the On-Premise computing products allow the possibilities of having complete control over the data and information– thus, to be able to access information at any time without restriction.
While ROI is effectively recognized quickly with On-Demand model, many thoughts also seem to appear that the recurring monthly fees involved in the invoicing approach make them a bit more expensive option than On-Premise models in the long run.
Forrester Research has pointed out that although On-Demand product suites eliminate big initial investments, they can however include monthly substantial fees, such as for industry-specific functionalities, additional storage fees, integration with On-Premise applications, etc.
But it could also be equally argued that long-term TCO of On-Premise product suites is equally unknown. Can you guarantee how much you need to budget for additional servers and storage in five years? Or how costly the next upgrade project is going to be? And as you need an in-house IT resource to manage and maintain those systems – will that head count go up or down?
Some organizations hurry up towards adopting a ‘cloud only’ approach, assuming cost savings are a guarantee. But not all applications are meant for the public cloud, and moving them may cost more.
Choosing On-Demand or an On-Premise product modelling solutions can be tricky, especially since both have pros and cons and can ultimately dictate successes of the enterprise. Whatever direction that the organizations decide to go in, relates to what the end user customer experiences show up in the end revenues.