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The business case for SaaS migration

Australian companies that still own and maintain back-office software, instead of migrating to Software as a Service (SaaS), are likely to be incurring many hidden expenses.

From the overhead of in-house resources and physical servers to missed revenue opportunities from lack of computing power, these costs can add up to hundreds of thousands of dollars or more.

Gartner says the shift to SaaS is inevitable, claiming that “by 2020, a corporate ‘no-cloud’ policy will be as rare as a ‘no-Internet’ policy is today”.

The research firm predicts cloud computing spending will increase from $67B in 2015 to $162B in 2020, while according to Forbes, 74 per cent of tech chief financial officers said cloud computing would have the most measurable impact on their business in 2017.

For businesses still sitting on the fence, here are four hidden costs you may not have considered in your SaaS migration versus on-premise cost-benefit analysis:

Missed revenue opportunities

If you are running your own software environment, you may find it difficult to respond quickly to spikes in customer demand.

A university running its own enterprise software on-premise, for instance, will only have a limited server capacity, which may restrict its ability to process the thousands of student registrations at the beginning of each semester. SaaS can instantly add server capacity to process this influx of student enrolments.

Similarly, for a council doing rates run, it can take a full weekend to process each quarter, due to the complexity of the task. Using SaaS, councils can seamlessly scale up for high load during rates runs, which are predictable and recurring, so that a quarterly rates run takes only minutes to complete.

SaaS is highly beneficial for any organisation that is growing or needs to respond quickly to new demands.

Business disruption

To operate efficiently, organisations need interoperable applications for invoicing, billing, document management and other back-office functions.

Those with disparate, legacy in-house software environments, such as government organisations, may find it difficult to embrace SaaS. Different software vendors have varied SaaS capabilities, which could result in costly integration projects that last for months or even years in some cases. It may also limit your organisation’s ability to move to a completely SaaS environment.

A single, integrated SaaS ERP platform removes the need for costly integration and enables businesses to embrace the full benefits of a true SaaS solution.
 
Compliance costs

Organisations may need to do a lot more work to comply with privacy regulations if they maintain on-premise software environments. This includes physically securing data centres, securing applications and maintaining disaster recovery capabilities.

Organisations can reduce their compliance workload by shifting to a SaaS platform that complies with Australian and New Zealand regulations. The financial benefits of SaaS also increase over time because it reduces the need for major software and hardware upgrade projects to comply with the ever-changing regulatory environment.

Disaster recovery

Disaster recovery (DR) can be a costly and time-consuming process for on-premise solutions. Backup tapes alone can cost thousands of dollars per annum. Additional costs include offsite tape storage for DR purposes and all the expenses associated with locating and accessing the backup tapes when needed.

With SaaS, the vendor will take care of backups and disaster recovery, meaning businesses can focus on their core business, rather than securing the software.

SaaS is set to be the dominant cloud computing model in years to come according to analysts, offering organisations a host of cost savings and business efficiencies. Australian enterprises are expected to spend 11.7 per cent more on software in 2018, with analysts pointing to SaaS as a key driver of this spending.

As Gartner has stated, SaaS is the inevitable future of business software. It offers a way to simplify your IT infrastructure, optimise the performance of your systems and take advantage of massive economies of scale. If you haven’t already, now’s the time to embed a SaaS migration strategy in your organisation’s strategic long- and short-term planning.

By Paul James, TechnologyOne GM of Cloud.

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