What is the total cost of ownership for SaaS technology compared to traditional models?

For years, the default choice for managing maintenance operations has been on-premises computerised maintenance management systems (CMMS) and computer-aided facility management (CAFM) software. 

As other solutions moved into the cloud, CMMS/CAFM remained on-prem, as many companies felt maintenance software upgrades were a low priority. 

But now, things are changing. 

As overheads increase, business leaders seek new ways to streamline operational costs. And it’s opening the door for Software as a Service (SaaS) CMMS solutions.  

By nature, SaaS CMMS offers a lower total cost of ownership (TCO) than traditional models while also delivering performance benefits. 

Let’s compare the two approaches to illustrate… 

Initial CMMS investment costs 

The first difference between on-premises and SaaS CMMS is their payment model. 

On-premises solutions tend to be CAPEX investments, involving significant up-front expenditure. In addition to purchasing the software, some vendors will charge extra for installation and management, along with monthly hosting and customer support fees.

Other ongoing overheads may also be associated with on-prem CMMS solutions, which should factor in TCO calculations. These include: 

• Purchasing servers and server software licenses
• Purchasing support licenses
• Management tools
• Technical training for managing the servers and data  

In contrast, SaaS CMMS systems use OPEX-based contracts, which avoids ‘lump sum’ payments up-front. Instead, customers make smaller, regular payments in a subscription model. This shift makes SaaS CMMS software affordable to smaller companies that can’t afford a significant CAPEX investment. 

Many SaaS technology vendors will package all their costs into a single, transparent payment that covers customer support, upgrades and technical assistance. Doing this makes TCO much easier to calculate. 

Cost of installing and integrating CMMS software  

At its core, the SaaS model is designed to simplify processes, which can make installation and integration more cost-effective. 

Deploying an on-premises CMMS system can involve complex integrations. It’s demanding on IT resources, and many companies rely on their chosen technology vendor to deploy the software correctly. 

The downtime needed to integrate on-prem CMMS software can also impact productivity in other parts of the business, which some companies forget to factor into their TCO calculations. 

In contrast, SaaS CMMS can be deployed remotely via the cloud and integrated via APIs, saving significant time, resources and investment. Some solutions (including ShireSystem by Elecosoft) can be up and running within minutes with robust functionality out-of-the-box. 

Faster installation also means staff can explore and use the software quickly, meaning SaaS CMMS solutions often deliver better ROI than traditional technology models. 

CMMS management costs  

Beyond deployment, there is a significant cost difference in the operational model of SaaS versus on-premises CMMS software. 

Many costs are associated with managing CMMS solutions, all of which should be included in TCO calculations to understand the actual cost of ownership. These include (but are not limited to): 

• Resolving faults and technical incidents
• Implementing changes within the infrastructure
• Ensuring server availability and capacity 
• Maintaining documentation 
• Confirming the latest virus software has been deployed 
• Carrying out regular security audits 
• Monitoring and reporting on performance 
• Managing general admin requests, e.g. setting up new user accounts and permissions 
• Managing storage and backing up data 
• Managing IT support desks and training new users 

On-prem CMMS software requires resilient architecture with multiple site failovers and back-ups to ensure system availability. Fixes and upgrades often need to be carried out on-site, either diverting internal IT resources or forcing companies to pay an external contractor. 

The constraints of on-prem CMMS software can also impact its value over time. Patches and upgrades must be manually executed, meaning there can be a time lag between vendors launching system updates and companies adding new features.     

With SaaS-based CMMS software, the responsibility for managing and upgrading technology shifts away from internal IT teams. With a fully managed solution, updates are rolled out seamlessly in the background via the cloud, ensuring companies always have the latest features. 

Not only are cloud-based repairs and improvements easier to execute, they also reduce the cost of managing and improving CMMS software. 

It’s much cheaper to deploy fixes and features remotely, and most vendors are working to a service-level agreement (SLA) that requires them to respond promptly. No more extended downtimes or long to-do lists! 

Lifetime costs of CMMS software

Clearly, the cost of setting up and managing CMMS software is lower with SaaS-based technology. But it’s also essential to consider the lifespan of a solution when calculating the total cost of ownership.

As SaaS CMMS software has no hardware requirements, it can’t outgrow server capacity or require new installations as companies expand to new sites. Organisations can continue to use the same CMMS system as they grow, increasing its lifespan. 

The automatic updates and upgrades we previously discussed also help to lengthen the lifespan of CMMS software. Companies gain instant access to useful new features and functionality, increasing its value to their business. 

The long-term implications of software choice become more evident if we analyse typical TCO figures for SaaS vs on-premises CMMS software over three years: 

Many companies expect the up-front costs to be higher with on-prem software. However, they’re surprised by how expensive server-based CMMS solutions are in the long term. 

The financial impact of vendor partner  

In addition to the solution itself, vendor choice can also affect the total cost of ownership for CMMS software. 

For example, experienced SaaS vendors can guide maintenance teams through the transition from on-premises to cloud software, ensuring a seamless upgrade. Post-migration, they also provide support and training resources to maximise the value of new technology. 

Market-leading CMMS technology providers focus on rapid deployment and helping companies use their solutions to benefit maintenance operations. 

Calculating the TCO for SaaS v on-prem CMMS software 

While there is no definitive total cost of ownership for SaaS CMMS versus on-premises CMMS solutions, the considerations we’ve discussed provide a framework for accurate calculations. 

Companies need to consider the ongoing costs of their CMMS software to avoid focusing solely on initial investment. It’s also easy to forget the financial impact of prolonged system downtime or overburdening IT staff. 

Based on these costs, SaaS-based CMMS software generates a lower TCO than on-premises solutions – primarily when implemented by a cloud CMMS expert like Elecosoft. 

For more than 40 years, Elecosoft has been pioneering SaaS technology. ShireSystem, our SaaS-based CMMS solution, is used by industry leaders, including Wren Kitchens, Xaar and Ibstock Brick. 

Need help calculating your TCO? Download our free ebook: cloud CMMS/CAFM vs on-premises CMMS/CAFM.