What do people consider 'normal' ratio for costs to move applications from on premise to SaaS models?  A vendor is quoting me to move one app. The annual cost goes up 3x. The SaaS option obviously includes all upgrades, patch management, Operating system and SQL licenses etc. However 3x seems expensive, is there an industry benchmark?

Enterprise Applications Not sure there is an industry benchmark, but one way I've done it is to calculate total cost over a three or five year period - which applies to this situation.  If you factor in hardware, power, etc. - basically TCO with on prem for five years, and TCO for SaaS for five years, the numbers should speak for themselves.  This of course, doesn't factor into the equation politics or other "internal" pressure to move to the cloud.  Hope that helps.

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Pulse User

Not sure there is an industry benchmark, but one way I've done it is to calculate total cost over a three or five year period - which applies to this situation.  If you factor in hardware, power, etc. - basically TCO with on prem for five years, and TCO for SaaS for five years, the numbers should speak for themselves.  This of course, doesn't factor into the equation politics or other "internal" pressure to move to the cloud.  Hope that helps.

Pulse User

I have seen On Premise Enterprise software with annual costs of around 15 to 20% of the license cost per year, for support and updates, to keep the installation evergreen. When moving to the cloud, in theory they are providing a higher value, but 3x seem excessive unless it would be 3x the annual cost without having to buy a perpetual license. New entrants usually tend to offer their SaaS with price situated around 15 to 20% of the license cost of their competitors.

Pulse User

I would second Matt's response above. TCO is the only way to come out with a real ROI and your mileage may vary depending on your collaboration with CFO (or CIO). For your on-prem deployment, you have costs related to facilities, server, storage, backups, networks, OS, softwares, vendor licenses and associated manpower to support the entire lifecycle for these products. You will need to account for managing a large infrastructure team (or an outsourcing partner). You will also need to account for an engineering arm that will spend time in picking the right solution and making sure everything works together as planned. As Matt highlighted, 5 year is a good benchmark to use as enterprise applications as most of the hardware you own would have depreciated within that timeframe.  For SaaS, you still need teams with some basic skills such as networks, compliance, security, functional consultants etc but that is a must smaller set than the one supporting your on-prem setup. Your TCO should also include cloud benefits that are expensive to achieve with a traditional setup  - shift from Capex to Opex ; Scale up/down ; Cost per user per time period (week/month etc) ; increasing set of new features without costly upgrades as you are always using the latest version. Most SaaS vendors will support "ready to use" integration solutions with other PaaS/SaaS providers which, is yet another thing that you don't have to worry about.