Collaborative Portal Decisions That Make "Cents": Reducing TCO By 50% Or More With SaaS Solutions

Traditionally, large IT organizations have utilized their resources to design, build and launch new applications within their datacenters using commercial off-the-shelf (COTS) software. This was considered the primary function of IT. IT built these solutions from the ground up, with the customizations to meet the needs of the organization and with the intent of creating a competitive advantage. Many of these needs are common across different enterprises, and the SaaS market has now created solutions to address these common requirements.

The financial evaluation of a SaaS solution needs to take into account several factors that have not always been considered in the traditional build-it model. Under the build-it paradigm, it is assumed that the cost to develop a new application is equal to the cost of the software package purchased. After all, the IT personnel who would customize the software solution were already considered an allocated expense item in the IT budget. And capital equipment such as servers may or may not have been considered; it was an assumed part of the cost of doing business.

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