By now everyone has heard of “the cloud” or “SaaS” (Software as a Service). Its on-demand, flexible and can save you time and money. But information on the long term benefits of moving your business to the cloud has been less available still casting a cloud of doubt for many organizations. EPM Live understands the confusion surrounding cloud apps and in this article I will take a in-depth look at the benefits, the risks, costs and ROI for cloud applications.
Cloud applications continue to gain popularity in enterprise applications but there are still many questions surrounding the cloud, what are the benefits and what is the ROI for organizations who are leveraging them? I recently read a paper from Forrester on the ROI of cloud Apps. Forrester’s recent budgets survey showed that 51% of firms plan to increase spending on software-as-a-service, while only 9% plan to decrease spend.
Companies are attracted to fast deployment speeds, low upfront costs, and ongoing flexibility to scale up or down as needs change. Many SaaS solutions also offer a more user friendly UI than their on-premise competitors due to their more recent introduction or the providers’ ability to rapidly update the UI through automatic, seamless upgrades.
How do you know if leveraging cloud applications is the right move for your company? In the Forrester article they offered up their Total Economic Impact™ (TEI) model, four key questions to help companies determine the ROI of cloud applications.
1. Benefits – How will your company benefit from cloud applications?
2. Costs – How will your company pay, both in hard costs and resources, for cloud applications?
3. Risks – How do uncertainties change the total impact of cloud applications on your business?
4. Flexibility – How does this investment create future options for your organization?
Key Benefits of a cloud application include:
(In a recent survey, Forrester found that 26% of cloud subscribers plan to increase the number of cloud vendors they work with over the next year.)
· Faster deployment speed
· Reduced support needs (SaaS providers typically include a help desk in the subscription reducing or eliminating IT support)
· Simpler, more frequent upgrades
· Better user adoption
Key costs on SaaS Applications:
The primary cost associated with cloud applications is the ongoing rental fee for using the application, often per user per month or usage-based. Cloud applications require more focus on contracting, SLAs, and performance management. That being said, there is a significant reduction of other costs such as internal infrastructure and hardware requirements. Many cloud applications don’t offer full suite solutions meaning firms often face a fragmented, multiple application landscape as they move more and more technology to the cloud. This multivendor environment means additional costs for areas like integration, provisioning, end user support, upgrade management, testing, and workflow. EPM Live does offer a full suite of solutions including PPM, application lifecycle management, new product development, professional services automation, etc. Overall, the cost of EPM Live’s SaaS solution is significantly less than an on-premise deployment.
What are the risks?:
No new trend is ever without risk. Here are two key risks to consider; Vendor viability as the market shakes out, and Vendor lock-in. Vendor viability risks are increased as this early market moves at such a fast pace. Users can become “hooked” on user-friendly cloud applications. Business users may strongly resist switching from an application they like. Also, most vendor switches will require data migration and implementation costs to move to a new solution. Businesses will always be faced with ongoing decisions such as upgrading, adopting new trends, and investing in the latest and greatest technology. As mentioned before, every decision can result in a risk; however, to maintain competitive advantage and scale with the times, businesses will find that the benefits far outway the risks.
The Cloud Business Value:
Forrester released a quantitative assessment of the economic implications of cloud applications. They evaluated the key drivers of benefits, costs, and risks for an organization moving from on-premise to the cloud. Forrester found that the Total Economic Impact Analysis for CRM cloud applications are 20% ROI payback between 12 and 24 months, for ERP applications a 6% ROI payback in more than 2 years, and for business productivity applications Forrester found a 27% ROI payback between 12 to 24 months.
In this early market of SaaS applications and with the highest ROI of the three business sectors analyzed in Forrester’s research it’s no wonder many companies are leveraging business productivity applications. At EPM Live we believe in the power and flexibility of the cloud and unlike many vendors on the market today our online solution is a full suite application for the entire organization. Besides our core Project Portfolio and Work Management solutions, EPM Live is also leveraged by many organizations for New Product Development and Professional Services. Our apps allow organizations to bring all work and all departments onto one centralized platform increasing productivity, viability and user adoption. To learn more about SaaS PPM and how EPM Live’s online solution can help your business join us for our free upcoming webinar, SaaS PPM – How Do You Know When It’s Right For You? or read one of previous articles, a comparative analysis on SaaS vs. On-Premise.