The problem:

We are in the middle of a historical upheaval of information technology. We don’t know where we will end up with. But we really need to maximize the value and cost-benefit of our I.T. investment which is aimed to support our business. Corperate should generate money to pay for employee salary, material costs, machineries, and share-holder interests. Not to buy server and upgrade software every year.

 

The solution

To generate more and retain business, you need a CRM system.
To save I.T. expenses, you need SaaS model.

To invest wisely and flexibly in a fast-growing technology, the simplest way is to spend as little as possible up-front. SaaS model is designed to save money.

To use SaaS, you need to pay for subscription periodically. But many people do not foresee the hidden cost of buying software. First, it is upgrade. New version of software comes out every year with new features you do not need. You may think you can go on using the old version. Problem is, software vendors do not support, and worse of all, sell old vesion any more. Now when you have new users and/or new machines. You cannot buy old version of software and/or you cannot install the old version software on the new machines' new OS. So, you buy new version for the new users and/or machines. But then you find some incompatibility between old and new version when users want to exchange files. Sooner or later, you must give in and purchase the new version of software. This is a decision we have been seeing in the past 15-20 years. Now, you may be able to see, it is actually no much difference from a subscription mobel.

The difference though, is the initial cost of buying all the servers machines and experts to set them up. It is also the on-going cost of upgrading to new client AND server machines to run the new version of software. It is, further, the cost of expertise (in-house or not) to maintain and upgrade the systems.

Just like an in-house electrician cannot maintain a generator like one can do in the electricity company. An in-house IT person could never maintain his server and hence the service like the service provider. Even given the same expertise level, an in-house guy could never have the resources like a service provider have. Security, backup, redundancy, recovery, even bug-fix and enhancements... Service privider can affort the best or even exortic specialized hardware, software, and personale simply due to the economy of scale.