How does Traditional vs Software as a Service (SaaS) compare under this lens?
With the rise of open source, much of the narrative has focused on the free nature of the products, the flexibility and the size of the community that support these platforms. Understanding true TCO requires us to look much deeper into the costs beyond initial download.
So where are the hidden gems then?
[Hidden cost #1] Customization
You will often hear about open source infrastructure being free. Therein lies our first catch. Although software in an open source environment is often free of upfront charge, almost always, as soon as you go to customize the platform to meet your individual business needs, the cost begins to accumulate.
[Hidden cost #2] Updates
The value of a community of software developers begins to diminish rapidly unless you’re prepared to invest in the Value Demand and Failure Demand categories of cost. These ensure that your web property remains current, up to date and with the latest features.
The dependency between your infrastructure and your software also hides considerable costs. You will need DevOps to not only keep your operating system safe from security threats but also current to ensure the performance of the software and the infrastructure.
[Hidden cost #3] Hosting and management
SaaS platforms are generally fully managed. What this means for the end client is that the development, infrastructure, and service costs are amortized across the whole installed community. The costs that come after the initial build of an open source platform are already costed into a single fixed monthly payment for SaaS. This includes all of your Value Demand costs such as upgrades, new features and maintenance. Once you become part of the SaaS community you benefit from the existing value that has been created and from future benefits that are applied.
[Hidden cost #4] Re-platforming
Most clients expect that re-platforming is a natural part of the web property lifecycle. With SaaS platforms the need to re-platform vanishes. There is no need to redevelop features when there has been an upgrade to the underlying system. This is a considerable saving when you consider the pace of change in consumers’ digital behavior and the constant need for business to innovate in kind.
Your hidden cost checklist
We’ve put together this handy checklist for you to ask next time you receive that quote for a re-platform or web build:
During Sales
1. How did you price your proposal?
2. How is change managed and costed?
3. Will the work be conducted internally or outsourced?
4. How much of the technology will be custom?
Infrastructure
5. What are the infrastructure costs?
6. Who is responsible for managing the infrastructure?
7. How is my data protected/saved?
8. Are there any additional Infrastructure costs?
9. Who do I call when something isn’t working or the website is down?
Build
10. How do we agree on the scope?
11. Who will build my web property and who will support it?
12. How experienced are you with the technology platform?
13. Do you offer warranties?
14. When does warranty end and then what?
15. Who is responsible after the warranty period?
Recurring
16. What are the general recurring costs to provide support for the platform specifically?
17. Does that cover the costs of updates and new features?
18. How long can I expect my web property to last before I need to re-platform?
19. How are significant upgrades priced?
20. Do you offer Service level agreements?