Choosing between SaaS and On-Premise for a Software Outsourcing Company in India

Software as a Service (SaaS) is a software delivery model for software outsourcing companies, in which vendors host the applications centrally and charge on a levered basis. These applications are available to the users via Internet. This software delivery model is in line with terms like ‘On-demand’, ‘Off-premises’ and ‘Application Service Provider (ASP)’. E.g. Microsoft Office 365

On-Premise is a software delivery model in which a client, installs and works on the software in-house. Organization’s own resources are used and it needs to obtain a software license for using the software for each server. On-premise software is commonly referred as ‘ShrinkWrap’ and ‘Software as a Product’.

The need for web servers is one of the main reasons for the companies for migrating from On-premise to SaaS.

The decision of going with SaaS or staying with On-premise, involves multiple steps:

• Determine whether there are any SaaS providers for the software you need and are they trustworthy.
• Some of the important concerns while making this decision are Cost (this being the primary one), Security, Customization, Control, Compliance and Infrastructure.
• Get an understanding of business needs of outsourcing companies and baseline them.
• Obtain a free trial from both vendors (On-Premise vendors and SaaS vendors) and then analyze and evaluate.
• Suitability check of applications should be performed for SaaS or On-Premise.
• Obtain the knowledge of vendor relationship difference between SaaS and On-Premise.
• With SaaS vendors, the benefits of multitenancy are realized. Multitenancy is allowing multiple users to share a single application instance at the same time retaining their own separate information.

The comparison of On-premise and SaaS is done to make the decision easy:

Parameters	SaaS	On-Premise
Implementation	Faster to implement because convenient and already built platform is available.	Takes longer duration to get implemented as personnel and equipment are needed to set up an environment.
Infrastructure	No purchase of software or hardware needed.	Extra hardware and software need to be purchased.
Customization	Customization is difficult as multitenancy is given the focus.	Highly flexible for customization.
Support & Maintenance	Very low dependency for maintaining the application. Control is in the hands of vendor.	Your responsibility to maintain the application. Control is in your hands and ownership is yours.
Mobile Access	Accessible through browser on mobile devices.	Minimal access through mobile devices.
Upgrade Cycles	Upgrades are iterative with very less involvement of IT.	Upgrade is your responsibility which is costly and takes a lot of productive time.
Cost	Pay per use & entry costs are low. High annual maintenance. Internal resources required are less.	No flexible pricing option and entry high costs are high. Low annual maintenance comparatively. Lot of internal resources such as tangible hardware assets are needed.
Security	Security risks are higher as applications are accessed via Internet. Server and Network security experts are needed.	Lower security risks as applications are accessed in-house. No specific security experts needed.
Validation for regulatory compliance	Vendor does the baseline review.	Validation is your responsibility. Enforcing these requirements is comparatively easy as control is in your hand.
Integration	Complex as it’s difficult to integrate with existing as well as new processes.	Simpler to integrate with existing and new processes.
Scalability	Scale up and scale down of solutions is easier.	Difficult to scale solutions easily, as it requires a lot of effort and commitment.
Redundancy	Redundancy is a bigger concern as to what happens if the solution provider fails.	As the data lies in-house it’s easier to store backup of the data and so redundancy is a lesser concern.
Availability	Resolution of cloud outage makes you dependent on vendor.	Outages resolution is your responsibility.

After comparing the two options based on these parameters, cost benefit analysis is performed for each of the vendors offering the solutions. The results of the analysis are compared and evaluated to make the right decision for a software outsourcing company.

To choose the deployment model that will suit the outsourcing company’s business, depends on factors including:

• Resource’s availability during each phase of the project.
• Data’s criticality.
• Size & culture of the organization.
• Organization’s requirements for integration.
• Control over customized environments.
• Annual Budget and Investment constraints.
• Regulatory commitments.

Conclusion: Thus a software outsourcing company in India should choose the option that suits the best, after analyzing and comparing the insights derived from this comparison.

Business – IT Strategic alignment

Introduction

(Wikipedia t. f.) defines Business-IT alignment as a dynamic state in which a business organization is able to utilize information technology (IT) effectively to achieve business objectives - typically improved financial performance or marketplace competitiveness. Software development companies are implementing IT strategies at a rapid pace that aligns with their business model which brings in elevation in overall performance of the companies.

(Rouse, What is business-IT alignment?, 2006) enlightens the role of executives in Business – IT alignment. Business-IT alignment involves optimizing communication between executives who take the business decisions and IT managers who oversee the technical operations. The employment of flexible business plans and IT architectures, as well as effective cost allocation, are critical components of any business-IT alignment implementation. Technical department managers can formulate and submit proposals that can be designed to ensure the optimum return on investment (ROI). Business executives can attend IT department meetings and seminars to elevate their understanding of the technical capabilities and limitations of the enterprise.

Purpose of Business – IT Alignment

It is important for all the software development companies in India to understand the purpose of Business – IT alignment. The purpose of Business – IT Alignment is to optimize the value that IT contributes to the enterprise. As such, in order to successfully design a strategic IT roadmap, it is important to start here. It is said that an organization has successfully aligned IT strategy to business strategy when there is:

• A shared understanding of how IT applications, services and technologies will contribute to business objectives – today and in the future.
• A shared focus on where to consume scarce resources, time and money; the trade-offs the enterprise is prepared to make.
• A credible working relation between the IT organization and the rest of the business evidenced by reliable daily operations, reactive problem management and predictable, innovative solution delivery.

Steps to achieve  Business – IT Alignment

(Group) gives four major steps to achieve Business – IT Alignment is achieved :

• Set Conditions to Achieve Alignment
• Scan for Hypothetical Enabling Technologies
• Determine IT Value Imperatives
• Develop IT Vision and Mission

Advantages of implementing Business – IT Alignment 

When the Business – IT Alignment program is completed successfully, following are the advantages that the organizations will get:

• Support from key executives to participate in developing the IT Strategy.
• A better understanding of how emerging technologies, applications and trends can or will impact your enterprise and your IT organization.
• A clear expectation of how IT will contribute to reaching the company’s business goals and objectives.
• A well-defined articulation of IT’s role in, and value to, the enterprise for the strategic horizon.

Issues in absence of Business – IT alignment 

Following are concerns that organizations often face when they lack Business – IT alignment :

• IT driven projects do not meet deadlines and budget constraints
• IT investment do not pay-off
• Ambiguity whether IT strategy and principles are appropriate
• Unclear outsourcing strategy
• Insufficient implementation of security controls
• Financial reports not available in time and accurate manner
• Optimization of IT budget utilization not possible

Conclusion

While the area of IT strategy is broad and incorporates many trends and new technology developments, Software development companies in India are keeping pace with the global market by adopting IT Strategy aligning to individual business model. Business-IT alignment is the correspondence between the business objectives and the Information Technology requirements of an enterprise. These two factors often seem to contradict, but many technical and economic experts agree that alignment between them, maintained over time, is crucial to the success of an enterprise.

Bibliography

• Group, I.-R. (n.d.). OptimizeIT | Info-Tech Research Group . Retrieved 05 04, 2016, from Business - IT Strategic Alignment: https://www.infotech.com/optimizeit/business-it-strategic-alignment
• Rouse, M. (2006, 05). What is business-IT alignment? Retrieved 05 04, 2016, from business-IT alignment: http://whatis.techtarget.com/definition/business-IT-alignment
• Wikipedia, t. f. (n.d.). Business-IT alignment. Retrieved 05 04, 2016, from Business-IT alignment: https://en.wikipedia.org/wiki/Business-IT_alignmentxof IT Strategy: http://panorama-consulting.com/the-importance-of-it-strategy/