Sep 20

Saas vs On-Premise

In the last few months we have received several questions from our prospects and customers related to deploying our T&E expense reporting application in a SaaS (Software-as-a-Service) model versus a licensing model. We are one of very few vendors that provide both options to customers.

While SaaS is quickly becoming the model of choice for many, there are good reasons to evaluate the licensing model as well. So how does SaaS really compare to the more traditional licensing model? Well, let’s review some of the typical questions and comments we have seen.

‘We are interested in subscribing to your SaaS model because it is cheaper than licensing it. Is this a valid statement?’

Short answer: Yes.

Generally speaking, an on-premise deployment through licensing requires greater upfront capital investment (CFOs typically amortize this cost as Capex) compared to the SaaS model. And there are several reasons for this – installing expensive hardware & software on-site, requiring resources and personnel to manage the hardware and software, ongoing maintenance expenses, upgrades, support fees and license fees. However with SaaS the company doesn’t have to allocate resources and personnel to manage the application. The additional charges for upgrades, hardware and administration fees are avoided and included in the monthly subscription. Customers simply have to login and go!

What are the benefits of SaaS and Licensing?

The SaaS model gives the buyer immediate business benefits with frequent updates, shorter deployment times and independence from having to maintain an IT team to support the application. There is also an easier adoption and more flexibility for end-users because SaaS vendors typically utilize the latest technology to include mobile apps, web based applications etc. compared to internal IT teams in end-user companies that cannot keep pace with vendors.

Licensing with On-premise deployments have typically provided more integration with existing IT and operational systems. But many SaaS solution providers (including us) now provide seamless integration with several systems. Also, there is always the risk  with management of data which might be easier to accomplish in an On-premise model vs SaaS. But then again, vendors like us provide customers with the option of sending them backed-up data periodically to alleviate any concerns.

SaaS or Licensing: which one is more flexible?

That depends – on the company, their operations, availability of resources and personnel and their goals in choosing between the two. Both hosted (through SaaS) and On-premise are scalable, easy to configure and have technical flexibility. However, SaaS is probably more flexible for the end user as there are no limitations in accessing it from anywhere with an internet connection through multiple mechanisms (web, mobile phone, tablet etc.)

Is SaaS still a risky proposition?

Licensing has always been the de-facto model compared to SaaS over the last several decades, at least. Hence SaaS is perceived to be more risky. And the main areas of risk revolve around impact risks such as loss of control, integration challenges and data storage being off-site. The risks with licensing a solution are more related to implementation such as deployment, support and training. And the risk can vary a lot and depends on the company’s operations and structure.

In conclusion, which model is better? Sorry, but there is no one single answer. It really comes down to the business objectives, goals and culture of the company. Some of our customers that have small IT teams have opted for our expense reporting solution in the SaaS model because it is much easier for them to manage. Other customers have opted for the licensing model because they wanted more control and some of them were bound by corporate policies to retain all technology applications and data within the company which is managed On-Premise. So the question really becomes – ‘SaaS vs Licensing: which size fits your company best?’

Additional resources:

* Very nice white paper on ‘On-Premise’ VS. Cloud-based solutions provided by GFI software – Link

* Educational video on Cloud Computing vs. On-Premise Solutions

Contact us for more information or if you have any specific questions we can help answer

One Response to “The Big Debate – SaaS vs Licensing for T&E Expense Reporting”

  1. Chuck Barry says:

    Great post! Very concise and informative. SaaS is *still* fairly new and I think may CIOs and CFOs are now warming up to the concept that the inherent risks are really not much more of a risk than in a licensing model; especially as it related to data management….

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