Is the Cloud Really Less Costly Than On-Premise?

To state the obvious, businesses of all sizes are moving their applications to the cloud or renting software as a service (SaaS) instead of licensing or buying the software outright.
The number one reason people cite is cost. Businesses large and small are under the impression they can save a bundle by moving their apps to the cloud. At the same time, companies who handle a move to the cloud badly can suffer a negative backlash from their user community.
When you consider all the cost factors, like your time, energy and risk to your business, will you save money in the long run by going with SaaS? The short answer is no.
One thing is clear: businesses will pay less up front for cloud vs. on-premise. Modern SaaS systems are rented on a pay-as-you-go basis, or might have short-term contracts. Average license fees for equivalent on-premise software range from two to three years’ worth of SaaS subscriptions. Add in 20% annual maintenance when you buy and install your own software and you are in concept paying three years’ worth of subscription revenues up front for the same tools.

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