Cloud ERP Vs On-Premise ERP: Getting The Total Cost Of Ownership Analysis Right

Posted by Stefan Grahn, VP Deltek First EMEA on December 6, 2013

cloud erp

These days the choice between Cloud ERP or On-Premise ERP makes your Total Cost of Ownership (TCO) analysis more important than ever.

The TCO ananlysis is extremely important to consider regardless of whether your comparison is between a Deltek Cloud ERP solution and hosting your own Deltek ERP solution; or if it is between a Deltek Cloud ERP solution and one of our many traditional non-Cloud ready competitors.

The problem with this kind of TCO comparison is getting it right. Whereas the Cloud ERP calculation should be easy, at least if the vendor has a transparent and clear pricing model, calculating all the internal and ‘hidden’ costs of hosting your own ERP solution is more of a challenge. Even these days, when Cloud and SaaS are mature and viable options for any CIO and CFO, we encounter companies who seriously believe comparing the SaaS subscription fee with the perpetual license fee and annual maintenance fee of an on-premise solution is a relevant comparison. Luckily enough we have TCO tools and objective evidence such as independent research/analyst reports helping us convince those companies that they are comparing apples and oranges.

If you are going to calculate the TCO of hosting your own ERP solution you definitely need to include all relevant cost elements: server hardware (including regular refresh), server software (including regular refresh), operations and application management (IT staff and any external consultants). Independent research shows that whereas the SaaS subscription fee typically counts for 60-75% of the TCO over 5 years, a Perpetual license and annual maintenance fee only counts for 20-30% of the TCO over 5 years.

The truth is that no one can host a Deltek ERP solution more cost-efficiently in a secure, reliant and redundant way than Deltek. We use the world’s leading IaaS provider (Amazon Web Services) and have a world-class Cloud Operations team specialized in hosting Enterprise Software in the Cloud. I am happy to challenge anyone to prove me wrong.