SaaS vs. On-Premise Utility Billing Solutions
If you're considering the costs of a new utility billing solution, it's important to understand the Total Cost of Ownership (TCO) you may run into when looking for a cloud based or on-premise solution.
A TCO analysis provides a more accurate cost comparison over the lifecycle of your solution. It encompasses all expenses associated with maintaining hardware and software infrastructure as well as IT staff.
On-premise solutions require extensive up-front capital to purchase equipment and software. Maintaining updates to the infrastructure can create unforeseen economic burdens, versus a fixed recurring expense where the cloud service provider guarantees continual improvements.
Let's Start By Defining SaaS And On-Premise
Software as a Service (SaaS)
A solution leveraging remote servers over a secure internet connection. Managing, processing, and encryption of data is the responsibility of the cloud service vendor. SaaS applications are sometimes called cloud-based software, on-demand software, or hosted software. Customers have no hardware or software to buy, install, maintain, or update.
On-Premise or In-House Software Solutions
A solution comprised of purchasing and utilizing your network and server infrastructure, which runs in a data center located within the premises rather than remotely. You are committing to local ownership of your data, hardware and complete software stack, including the liabilities of maintaining and protecting the operating system.
It's important when assessing your solution that you have a good understanding of what makes each solution unique.
SaaS vs. On-Premise Utility Benefits
Cybersecurity
Cybersecurity
SaaS
Cloud Service Providers (CSPs) operate on a completely independent remote network, establishing a physical barrier between cybersecurity attacks activated in the company's network. CSPs utilize state-of-the-art virtualized firewall environments that can quickly detect, isolate and overcome potential malicious behaviors.
On-Premise Solutions
Internet is a component of every solution since even premise-based solutions must enable remote workers. Ransomware has become a costly liability for sites that do not stay ahead of all the cybersecurity vulnerabilities in operating systems and applications.
Resilience & Redundancy
Resilience & Redundancy
SaaS
Cloud service providers (CSPs) maximize the ability of a redundant and virtualized architecture to support uptime and "no downtime infrastructure changes". CSPs leverage advanced technology to eliminate dependencies between software and hardware, allowing them to automatically increase performance by adding additional horsepower and memory without interrupting operations, while also validating resiliency to power failure situations.
On-Premise Solutions
You are responsible for architecting a redundant and resilient infrastructure that accommodates high availability, backups and recovery. On-premise solutions must balance the economics of investing in redundant hardware and software, which often lays idle since these components are typically only used when the primary environment fails.
Costs
Costs
SaaS
Cloud service providers are responsible for your hardware and infrastructure, which means 100% of the costs across the entire lifecycle is covered by the subscription. Organizations leveraging SaaS solutions can forecast the cost of implementation, maintenance and additional services as predictable budget line items over the lifecycle of their use.
On-Premise Solutions
Requires substantial initial capital investment for the hardware and software. Every component requires continual maintenance, resulting in recurring charges in addition to the occasional unplanned repair expenses. Premise solutions also require highly technical and expensive IT resources for installation, configuration and maintenance.
Integrations
Integrations
SaaS
Cloud solution providers (CSPs) leverage APIs to enable the automated exchange of data between disparate systems. By accommodating real-time event-based exchanges of data, APIs create a logical management layer that isolates and minimizes inter-dependencies of maintaining the integrations.
On-Premise Solutions
Premise-based solutions assume full responsibility to maintain integrations while accommodating updates and security patches for each integrated system.
Backup & Recovery
Backup & Recovery
SaaS
Data is secured and backed up at regular intervals, with highly secure data encryption. Backups are continually executed throughout the day with weekly complete backups conducted during maintenance windows. Parallel redundant production or test environments are typically refreshed during the Backup and Recovery process.
On-Premise Solutions
On-premise infrastructures must ensure reliable, scheduled backups. Organizations must continually validate these backups to ensure there is no missing data or data corruption. Backups should be maintained in different physical data centers to minimize the potential of a catastrophic disruption. Recoveries must be validated to ensure they work. The only way to genuinely test a recovery is to replace the production environment with the backup environment.
Platform Efficiency
Platform Efficiency
SaaS
Cloud Service Providers (CSPs) offer secure access to their SaaS solutions, eliminating the overhead of procuring, installing and maintaining the hardware, network, and software infrastructure. Greater efficiencies are achieved by continually mitigating the challenges of flexibility, reliability, security and maintenance.
On-Premise Solutions
Premise solutions need to economically balance between flexibility, reliability, security and maintainability to avoid wasting materials, energy, people and money. Due to increased remote staffing, premise-based systems need to accommodate secure internet access. The additional overhead associated with maintaining premise-based solutions makes it very inefficient when considering the need for IT support, software and network upkeep costs, and reserve funds for unplanned disasters.
Just because you pay a one-time fee doesn't mean that you get everything you need for the lifecycle of using the application. Cloud-Based SaaS subscriptions incorporate the benefits of continual enhancements to the product and maintenance of the underlying infrastructure.
What's Included In Your Price
Cloud
Subscription Fee
Large Capital Investment
Implementation
Customization
Training
Upgrades, Patches, Filters
Rewriting Integrations
Performance Tuning
Maintaining and Upgrading Hardware
Maintaining/Upgrading Security
Maintaining/Upgrading Databases
What's Not Included In Your Price
On Site
Subscription Fee
Large Capital Investment
Implementation
Customization
Training
Upgrades, Patches, Filters
Rewriting Integrations
Performance Tuning
Maintaining and Upgrading Hardware
Maintaining/Upgrading Security
Maintaining/Upgrading Databases
Even On-Premise solutions have recurring costs that should be considered during the evaluation process
Looking for the Hidden Costs of On-Premise
While the popular argument against cloud-based services is the recurring subscription costs, On-Premise solutions often have hidden maintenance expenses that add up over time to more than what an annual subscription would cost.
IT Staff
How much do you budget each month for IT staff to maintain your servers and keep your solution running all of the time? Without that investment you could lose your data at any time.
Security Infrastructure
Do you want to be in the security or utility business? Staying up-to-date with the latest security trends takes money to keep your customers' payment information safe.
Power Consumption
Local server racks can use up to 16kW per rack! On-Premise solutions mean you have to foot the bill for the energy consumption, rather than offset that cost to a third-party.
Hardware Costs and Space
Do you have space in your office for servers? What about in a few years when solution speed starts degrading? With technology increases can you afford to keep up?
Software Upgrades
Security patches, upgrades, new versions of software, etc. often require additional costs, leaving you at-risk for outdated software due to additional expenditures.
Data Storage
Billing systems generate a lot of data each month, regardless of your number of EDU's. Have you planed on upgrade costs with that additional data growth?
The numbers speak for themselves. Statistics show that cloud-based solutions are cheaper long-term, and more efficient for users and customers.
Yearly increase in storage costs for on-premise solutions
(EuroStat)
Report operation improvements within the first few months of adopting the tech.
More cost effective to implement cloud based solutions
Report significant improvements in security
Get a FREE Detailed Whitepaper on SaaS vs. On-Premise Utility Billing Solutions Total Cost of Ownership (TCO)
Looking to switch your current solution? Wondering what it involves and if it will be a smart investment? Looking to implement a cloud utility billing solution for the first time?
Our SaaS vs On-Premise Whitepaper answers these questions in detail:
- The reality utility of billing operations in and hybrid work environments in the 21st century.
- The detailed breakdown of total cost of ownership of an on-premise solution and its ability to scale to meet future demands.
- The breakdown of total cost of ownership of a SaaS solution, its benefits to your organization, and how it can be advantageous to the success of your entity overall.
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