SIIA White Paper Counters Common Misperceptions About Software-as-a-Service

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. As the first in a series of industry updates from the SIIA's SaaS Executive Council, 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 SaaS Executive Council is a multi-vendor coalition designed to formulate best practices for end-users of software applications, ISVs and partners. The Council is publishing the white paper to educate technology buyers and help them understand the realities and opportunities of a SaaS model. A simplified TCO calculator and worksheet is included in the white paper which is available for download on the SIIA Web site. With these tools, decision makers can make a more comprehensive comparison of the true TCO of SaaS versus traditional software and, therefore, make better-informed buying decisions.

"SaaS continues to gain momentum throughout the world because companies that leverage it are able to focus on core competencies," said Ken Wasch, President, SIIA. "The SIIA is committed to the further exploration of this model and we will provide technology buyers and service providers with the knowledge and tools to efficiently navigate through this paradigm shift."

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:

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

"Through the TCO white paper, the SaaS Executive Council is advocating further education when taking into consideration the cost savings SaaS solutions provide," said Jan Sysmans, Chair of the SaaS Executive Council's Marketing & Communications Committee. "We have found 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."