The aging question - is hosted more expensive than on-premise?

The question remains about the financial efficiency of opting for a hosted solution over it's on-premise alternative. Hosted (or On-Demand as it's also known) has been given the tag of 'easy - yet more expensive over time'. We have to question this widely accepted statement on a number of levels as it can be mis-interpreted by those on-premise VAR's (value added resellers) who either don't offer, or don't wish to offer this variation of implementation.

Here at Virtual IT we offer Microsoft Dynamics CRM 4.0 on a SaaS (Software as a Service) basis. Our target markets are mostly small/medium businesses and a common objection we hear to hosted solutions from potential customers is "we've been told that over a three year period we'll be paying a hell of a lot more for your hosted solution rather than purchasing an inhouse solution on our servers from a competitor".

On-premise VAR's will sing the praises of their implementation strategy and how they will make you lives easier and so on, and all for a one off fee. But is it really? When you add the re-engineering of your solution after go-live when your team has actually had a chance to use the software and tell you where it's wrong, and then the annual support charges and callout charges - you're almost paying them a monthly fee anyway!

Lets put the facts straight on hosted solutions. Yes - it's a monthly fee which is ongoing but at least it's predictable. No massive capital outlays are needed initially, for servers or licences, or in the future for support or onsite consultancy visits. In addition - you don't need any IT experts inhouse as the whole behind-the-scences software is managed and supported off-site - leaving you to worry about your business success in a time when that must be uppermost in your mind.

At Virtual IT there is a team of CRM consultants and 30 or so first and second level support so any solution is well looked after using best of breed technologies. Microsoft have pledged to release upgrades to their CRM software every two years and this is also managed by the hosting VAR. If you've ever been through an upgrade process in your business you'll understand how much of a benefit this would be!

So these are some of the benefits, we've worked out that over a three year period an on-premise deployment could cost double that of on-demand. Of course there will be times when it's more sensible to bring software inhouse - maybe where the number of users exceeds the level where a per-user per-month model doesn't pay dividends, but we've found for SMB's in this current market, a hosted solution without a huge initial capital outlay can prove to be extremely beneficial.