A new study from consulting and market research firm Hurwitz & Associates revealed that over a four-year period, the total cost of ownership for a cloud-based corporate performance management system is as much as 77 percent lower than that of comparable on-premise midmarket CPM systems.

The study, “The TCO Advantages of SaaS-Based Budgeting, Forecasting, and Reporting,” examined the economic benefits of the Software-as-a-Service model, focusing on CPM systems with features geared toward midsized companies.

Hurwitz & Associates interviewed a cross-section of companies using SaaS from cloud-based budgeting, forecasting and reporting software developer Adaptive Planning, as well as on-premise CPM solutions from mid-market vendors including Clarity Systems, Longview Solutions and Prophix. The study was sponsored by Adaptive Planning and, not surprisingly, found the vendor’s software to be more cost effective.

“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,” said Sanjeev Aggarwal, partner at SMB Group and Hurwitz & Associates.

Other findings in the study revealed:
•         The cost advantages of SaaS solutions are significant across all deployment sizes evaluated, ranging from 10 to 100 users.
•         In the SaaS model, 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.
•        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 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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