On-premise To On-demand

  • May 2020
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On-premise to on-demand The hidden benefits for businesses of software as a service

Thursday 11th October 2007

The reasons businesses invest

– To add value – To reduce risk – To reduce costs

Slide 2 of 16

Copyright 2007 Quocirca Ltd

Evolution of IT delivery

    

Mainframe PC Client-server Internet/Web Service based computing/on-demand

Slide 3 of 16

Copyright 2007 Quocirca Ltd

Figures on SaaS use…  ...are hard to tie down  Niche usage  Low visibility  Specialist areas Specialist Applications Email Content security CRM Collaboration ERP Supply Chain Human Resources Slide 4 of 16

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SaaS specialists

And wannabes…

Slide 5 of 16

Copyright 2007 Quocirca Ltd

Doing the sums  5-year cost of ownership o £50/user/month o 100 users o £5000/month o £60,000/year o £300,000/5 years  A lot of money for a 100 user application Hidden costs of on-premise Infrastructure costs Management costs Cost of failed deployments Slide 6 of 16

Copyright 2007 Quocirca Ltd

The total value of SaaS

 Need to look at o Business risk reduction o Business value creation alongside o Cost management

 Put all three together and the case can become overwhelming Slide 7 of 16

Copyright 2007 Quocirca Ltd

Reducing business risk

 When a critical application fails, business stops  SaaS mitigates through – Enterprise class data centres – Enterprise class communications – Enterprise class IT management – Enforceable service level agreements

Slide 8 of 16

Copyright 2007 Quocirca Ltd

Increasing Business value  New and enhanced business models – Mobile and flexible working – Collaborative working – Virtual teams – Cross organisational business processes

Slide 9 of 16

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Bonus business value

Environmental

Slide 10 of 16

Socio-economic

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Managing business cost  Capex to opex  Shared infrastructure  Flexible payment – Subscription based – Usage based – Volume based – Even FREE

But cost is also the biggest challenge for application vendors making the move to SaaS

Slide 11 of 16

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Technical challenges of SaaS

Enterprise class application software Splitting management functions

Multi-tenancy delivery

Application level security

Slide 12 of 16

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Commercial challenges of SaaS

Pricing

Service level agreements Compensating sales staff

Cash flow

Slide 13 of 16

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SaaS cash flow for the supplier

On-premise (20% maintenance)

SaaS (monthly subscription)

Y1 Q1 Y1 Q2 Y1 Q3 Y1 Q4 Y2 Q1 Y2 Q2 Y2 Q3 Y2 Q4 Y3 Q1 Y3 Q2 Y3 Q3 Y3 Q4

“The initial drop in profits has been more than recouped” – Digital Union (3 years after implementing SaaS) Slide 14 of 16

Copyright 2007 Quocirca Ltd

Help at hand  Software infrastructure vendors o Microsoft o IBM Software o Open source o Oracle/BEA/VMware  Managed service providers o Leverage software vendor offerings o Monthly fees o Deferred billing o Usage base pricing

Slide 15 of 16

Copyright 2007 Quocirca Ltd

Conclusions • Businesses should consider SaaS because there are tangible benefits

• Moving to SaaS will fundamentally change the relationships you have with your key IT suppliers Thank you Bob Tarzey Quocirca www.quocirca.com Slide 16 of 16

Copyright 2007 Quocirca Ltd

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