Understanding the Deployment Options for&

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Configuration and customization
Whether at the point of initial rollout or later in the solution life cycle, companies should be mindful of the
configuration and customization requirements of their business management solution.
Configuration caters to basic changes in areas such as: (1) simple workflow, (2) access and security,
(3) user provisioning, (4) team membership, and (5) user preferences. Administrator-level and user-level
configuration flexibility will enable you to map your solution more closely to the needs of your users
and business processes. Both on-demand and on-premise solutions generally provide a wide range of
configuration options.

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Customization refers to more complex functional requirements such as: (1) creation of custom entities,
(2) custom screens, (3) custom tabs, (4) complex workflow, and (5) additional data fields. Existing screens,
tabs, and entities can normally be customized with relative ease within both on-demand and on-premise
solutions. On-premise or Hosted solutions, however, tend to provide a more effective solution in situations
where additional custom screens, tabs, and entities need to be created from scratch or where complex
workflow orchestration is required. Also, as customers of SaaS providers are typically charged for data over
and above a certain volume, they are well-advised to minimize customizations like adding optional fields to
avoid paying for additional data capacity. Look for a vendor that does not force you to adjust your business
processes due to its technological limitations. Also, be aware of additional charges, such as data volume
overage fees that can eat into your return on investment.

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Accessibility
For companies with employees working remotely or operating offices away from internal IT support, the
deployment decision is an especially important one. On-demand systems allow access to the system
wherever an Internet connection is available, regardless of location, enabling companies to centralize key
functions like accounting and operations on a standardized back-office system rather than having to resort
to disparate systems. Some on-premise providers offer a Web client that allows staff to access the system in
the same fashion as the on-demand systems.

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Mobility
Companies should expect their business management system to be available to staff–particularly, those
in customer-facing situations–regardless of their location or situation. If your company has field-based
employees, then mobile access using PDAs, smartphones, or BlackBerry® devices is a “must have”
requirement for your system. Mobile access to view reports, update contacts and sales opportunities,
qualify leads, track customer issues, and manage tasks and calendars is available for both on-premise and
on-demand solutions. A key consideration is selecting a solution that has been specifically optimized for
mobile device access, rather than one that resorts to using third-party applications for mobile functionality.
Also, disconnected–or offline–access should be available for situations where connectivity to the Internet is
not possible.

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2. Investment timeline and total cost of ownership (TCO)
With the average life cycle for a business management solution today of five to eight years, arriving at a clear
understanding of the likely total cost of ownership (TCO) associated with any new system is an important
consideration in any selection process. Deployment choice influences this area considerably, and companies
should compare the investment and cost structures of all models thoroughly before making a decision.

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On-premise systems require upfront capital investment which can be written down over the lifetime of the
system. On-demand systems, by contrast, involve fixed, periodic subscription charges over the solution’s life
cycle. On-demand, therefore, can provide several advantages to companies with limited budgets, as it does
not require the same upfront expenditure on software, hardware, or IT staff to support internal technology
infrastructure. When viewed beyond the near-term, however, on-demand solutions can result in higher costs
when compared to their on-premise peers. This is due to the fact that the on-demand monthly subscription
fee is charged for as long as the system is in use. In the case of the on-premise system, there are no
obligations to pay for software usage beyond the initial license purchase. Additionally, any TCO comparison
needs to factor in the fact that the SaaS model monthly subscription fee may change over the lifetime of the
system. Prospective customers should do their homework on SaaS vendors to determine whether there
is a history of increasing subscription fees, which would negatively impact the cost-effectiveness of the
SaaS solution.

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One way to mitigate the impact of the comparative increasing cost over time of an on-demand system is to
partner with a vendor that allows you to move from its on-demand solution to the on-premise version of the
same solution. Some vendors will even credit a portion of the on-demand subscription fees and allow you
to apply them to the license costs of the on-premise system. This platform flexibility also is beneficial when
business conditions change and the system needs to be customized in ways not supported by the typical
SaaS solution, or when integration to additional applications becomes necessary. The customer is able to
take advantage of the benefits of the on-premise system without having to deal with the pains of switching
systems, such as end user training, data access and migration, and implementation.

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By way of example, the graph provides a cost comparison between on-premise and the on-demand
options–Hosted and SaaS–over a five-year period. As we can see, the on-demand solutions require a
lower upfront investment (approximately 30 to 50 percent lower than on-premise). The cumulative total cost
associated with the on-demand solutions, however, increases at a faster rate than that of the on-premise
deployment. By year five, the on-demand deployments are approximately 15 to 50 percent more costly than
the on-premise solution.
On-demand, therefore, will suit organizations that: (1) wish to benefit from lower upfront investment
thresholds and (2) prefer a predictable, fixed monthly cost. On-premise, by contrast, is more likely to suit
companies with an internal IT function and where a lower longer-term TCO is a key requirement

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Carrying out a like-for-like cost comparison
Cost comparisons should be carried out on a like-for-like basis, as functionality and product capabilities vary
significantly between providers. It is also important to understand the functional differences between editions
of the same product. It may be the case that the vendor does not include some functionality in entry-level
SaaS packages in order to offer the product at a lower price point or to provide for a more compelling
upgrade path in the future when greater functionality may be required. Be wary of vendors that attempt
to lure you in with $99/user/month deals only to spring prices that are four to five times as much for the
solution that actually meets your requirements. Extra costs may include modules with additional functionality,
access to technical support, wireless functionality, data storage overage, data back-up service, and more.
Also, be aware that while the SaaS model is, in part, built around the ability for customer to pay on a monthto-
month basis, some vendors will only make the most attractive pricing available for those that commit to
multiyear contracts, or not offer the monthly pricing option at all.

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3. Data security / data access
While on-premise systems require you to retain data in-house, data used in on-demand systems is hosted at
an external facility. The degree of data sensitivity, therefore, will have an influence on deployment choice. For
certain companies, customer data is perceived to be too sensitive to be hosted externally; an on-premise
solution, therefore, will generally be the preferred option for these organizations.