SaaS vs. Perpetual

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When figuring out an ERP solution for a business, it is also necessary to understand difference between the different types of an ERP models. This article will give you quick understanding on the two major licensing models of an ERP.

SaaS or Software as a Service model is “subscription” based software service. It provides access to the software and its related components via a web browser and is hosted by a third party vendor. This model may have monthly, quarterly or annually subscription.  Whereas, Perpetual License is “paid in full” based software as this software is issued to the user on a permanent basis. This type of model is delivered on customer’s own server and only requires annual maintenance.

In SaaS model, customer only purchases or rents and uses the software on a subscription basis. The software needs to be installed behind the firewall in the customer’s data centre or at their outsourcer. In the Perpetual License the customer has to build up its own infrastructure like servers, data centre and has its own managing staff. All the necessary hardware, its maintenance and support etc. are taken care by the vendor.

Another important factor that is to be considered when considering the ERP model is Cost. Total Cost of Ownership (TCO) for the customers in perpetual license is huge as the up-front license cost of perpetual license is more. Also, the cost of additional hardware, infrastructure, yearly maintenance and support fees increases the perpetual licenses cost. When compared to the SaaS model, the cost of ERP subscription is very less. However, in long run perpetual license can be cheaper once the breakeven point arises. This can be typically somewhere after 2 to 4 years, though it may again differ depending on the various factors like the size of the business and no. of users. Most of the servers today are equipped with virtualization software to increase their utilization, yet the average utilization is very low below 50%. So, in that case on-premises software will always be more expensive and subscription model or SaaS license is much cheaper option.

When coming to the Perpetual License vs. Software as a Service (SaaS) one is not better than the other. Both the models have their own usage and benefits but depending on the needs and goals of the business one may choose the type of the ERP model.

To comprehend better about an ERP models, to attain a full benefits from an ERP and choose a right solution for your company write us at
info@zipbooks.in or give us a call on +91 79 4003 7015.