Tuesday, December 27, 2011

Software as a Service or Installed?


As discussed in prior posts, going with a Treasury Workstation involves a decision between utilizing the Software as a Service delivery model or the Installed model. Each has its strengths and weaknesses.
Googling this topic will get us zillions of hits. A lot of these are written by folks with an ulterior motive. One SaaS vendor had a pros and cons, and in the cons had a bullet that said installed software costs about 23% of the installed price in annual maintenance and licensing fees. I know from experience this is not always the case, at least in the projects I have been involved in.

Triangulating
As you know from prior posts, I am a fan of the process of “triangulation”, which in research mode means answering the question “what are the common and universal themes?” or “what topics show up more than once?” rather than taking any one document at its word.

In a sense it is creating a “best of…” set of information. Where there are many opinions, this process helps to identify what we might be able to really believe, as opposed to running into a “one off” opinion.

Links to six articles I reviewed are at the end of this post. In addition, there are links to several consultants who maintain archives on Treasury Workstation vendors and selection issues.
For the Treasury Workstation, there are two main factors that show up in almost every piece.

Financial Elements
The financial implications are obviously one of the primary drivers in this decision. There are a couple of different perspectives that need to be considered.

Payment Timing – for an installed system, there will be a large initial outlay of cash for the purchase of the license and the installation. The SaaS version has a much lower initial outlay.

Some organizations will appreciate the ability to capitalize and amortize a larger upfront payment, while others might consider an annual operating outlay to be more advantageous.

Ongoing – these costs are associated with annual maintenance and licensing fees. They can vary considerably. In theory, the installed system should be lower than the SaaS, since the installed vendor got an upfront payment, is not hosting anything on their system, and is not directly responsible for the continuing maintenance of the system.
In addition to payments to the software vendors, internal costs will also differ. The resource requirement is going to depend, no matter the choice, on how the system needs to integrate with others within the organization.
Deployment and Integration
The ability of the software to “play well” with the rest of the infrastructure is a primary factor in what the magnitude and scope of deployment and integration will entail.

If the installed route is chosen, it is often due to the fact that a deeper integration with the rest of the technology infrastructure is desired, which can take more internal resources to accomplish.
However, given that the SaaS systems cannot be customized to a great extent, it is also possible that the resources required to modify existing internal systems to work with the external will also be great.

Upgrades – since upgrades for the installed user are optional, a system delivering acceptable functionality can avoid costs associated with adding new or updating features, whereas a SaaS provider will pass those along.
To the extent that customization has occurred, upgrades pose the risk of making those customizations obsolete, so they need to be reconfigured with the upgrade.

Key Takeaways

Selection of an Installed or SaaS version of a Treasury Workstation requires a lot of thought and effort with respect to cash flow differences between the two products, and the organization’s implementation of its’ IT infrastructure strategy. Both forms of Treasury Workstation have their advantages and disadvantages, and it is up to the organization to decide what factors are to receive more merit in the decision than others.
Questions

·         If you have recently implemented a Treasury Workstation solution, what were the primary factors that drove the decision between installed or SaaS versions?

Add to the discussion with your thoughts, comments, questions and feedback! Please share Treasury Café with others. Thank you!

Links for the Article
http://www.upsidesoft.com/Upside+Software/PDF/UpsideLive_ProductSheet-SaaS_vs_TradInst.pdf

http://www.cabinetng.com/white-papers/internal_v_hosted.php

http://www.pragmaticmarketing.com/publications/magazine/6/5/the-economics-of-software-as-a-service-saas-vs-software-as-a-product

http://www.ama-assn.org/resources/doc/hit/asp-saas-client-compare.pdf

http://www.capterra.com/blog/finding-buying-software/top-3-advantages-and-disadvantages-of-installed-software-vs-saas

Consultant Links

http://www.treasurystrategies.com/rl/Treasury%20Technology

http://www.strategictreasurer.com/Links.php#tech

http://www.treasolution.com/ts_treasurylinks_treasury_technology.htm

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