Study Finds Total Cost of Ownership for SaaS CPM Solutions is as Much as 77% Lower Than That of Comparable On-Premise Solutions

05/11/2010

Midsized Companies Achieve Dramatically Lower Long-Term Costs Via On-Demand Model, Hurwitz & Associates Research Finds

Adaptive Planning, the worldwide leader in on-demand financial planning and reporting solutions for companies of all sizes, today announced that a new research study on corporate performance management (CPM) solutions validates that the total cost of ownership (TCO) for Software-as-a-Service (SaaS) solutions is significantly lower than that of on-premise solutions.

ebizQ received the following:

The report by technology analyst firm Hurwitz & Associates finds that the four-year TCO of Adaptive Planning’s SaaS solution is as much as 77 percent lower than that of comparable mid-market CPM solutions.

The study, “The TCO Advantages of SaaS-Based Budgeting, Forecasting, and Reporting,” examined the economic benefits of the SaaS model, focusing on CPM solutions with functionality geared to midsize companies. Hurwitz & Associates interviewed a cross-section of companies using SaaS solutions from Adaptive Planning, as well as on-premise CPM solutions from mid-market vendors including Clarity Systems, Longview Solutions, and Prophix. Key findings from the report include:

• The cost advantages of SaaS solutions are significant across all deployment sizes evaluated, ranging from 10 to 100 users.
• In the SaaS model, application software costs (subscription fees) account for roughly 62 percent of the total solution cost. In the on-premise model application software costs (including the upfront license fees and annual maintenance fees) comprise just 17 percent of the total solution cost.
• Thus, companies that only compare the software application costs will overlook significant expenses that contribute to the total cost of ownership.
• The IT infrastructure and management cost category accounts for the biggest difference between the TCO of the two models. There is no infrastructure cost associated with the SaaS model, yet the hardware, infrastructure software, and personnel costs required for the on-premise model may range from $150,000 for 10 users to over $275,000 for 100 users over the course of four years.
• The SaaS model also has lower costs associated with application implementation and support, and user training.

According to the report, the SaaS model also delivers benefits beyond TCO savings, through decreased risk, faster deployment and productivity, increased flexibility, and higher customer satisfaction, and improved reliability and performance.

“These findings clearly point to a sizable TCO advantage in favor of Adaptive Planning’s SaaS solution compared with on-premise alternatives,” said Sanjeev Aggarwal, Partner at SMB Group and Hurwitz & Associates. “Via the SaaS model, companies of all sizes can gain access to enterprise-class solutions without incurring large upfront costs, or having to hire expensive IT staff for initial implementation and ongoing management. It’s clear that SaaS is fundamentally changing the software equation in profound ways.”

“The comprehensive analysis performed by Hurwitz & Associates provides clear evidence of the significant economic benefits that the SaaS model provides compared with the traditional on-premise model in the CPM space,” said William A. Soward, CEO of Adaptive Planning. “This is particularly striking because the cost savings are just one of the many advantages of SaaS -- TCO doesn’t include other key benefits, such as fast, two-week long deployments, and the ability to go live without involving an already over-burdened IT organization. And, of course, it doesn’t include one of the aspects of our business of which we’re most proud - our top-tier customer satisfaction.”

The full Hurwitz & Associates report is available for download at http://www.adaptiveplanning.com/docs/Hurwitz_TCO_of_SaaS_CPM_Solutions.pdf.

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