Total Cost of Ownership (TCO) is a key consideration in any capital IT purchase. TCO encapsulates value for the complete lifecycle during and after the initial investment. When it comes to deploying a PLM solution, TCO analysis can help manufacturers decide between an on-premises solution versus Software-as-a-Service (SaaS) cloud-based solution.
While software licensing may be the first consideration of investment, there are other factors that determine a solution’s complete lifetime cost of ownership. Operating costs, maintenance, and personnel expenses are all important components of TCO.
After analyzing financial burdens, it becomes clear why more food manufacturers are choosing cloud PLM over on-premises PLM solutions to achieve a lower TCO.
Lower deployment costs
On-premises licenses typically are purchased with a large, upfront investment in a perpetual license. Almost all cloud solutions are sold for a relatively lower subscription price. Subscriptions can range from monthly to annual to multi-year.
Additional costs with an on-premises model include setup and installation. Even without any customization or integration with existing infrastructure, on-premises deployments require some initial set-up expenses. Software installation, database configuration, and testing also need to be factored in.
With a true cloud solution, other than a possible set-up fee, there are no installation costs.
No costly infrastructure
Another major cost consideration with an on-premises deployment is the additional capital expenditure on high-performance computing to meet the demands of today’s new advanced PLM solutions. On-premise PLM solutions may necessitate replacing older technology with new infrastructure, including expensive servers, storage and networking equipment and database software. On-premises installations may also require upgrading users’ PCs to meet server requirements. Ongoing system support, including replacing or upgrading a server become an addition burden on the cost of ownership. Finally, an on-premises installation has additional operating overhead to be accounted for, including energy costs.
Hosted cloud software eliminates the need to purchase servers. When it comes to storage, most cloud providers include large amounts of data provisions in their base subscriptions. Users in cloud environments can access their PLM application via the internet from their PC, a web browser or a mobile app. Energy costs and system support are handled by the service provider.
Less maintenance and IT support costs
On-premises solutions are more costly to maintain than SaaS solutions.
With on-premises solutions, internal IT staff can spend hours maintaining, upgrading, or repairing high-performance hardware to ensure end-user availability and network security, while also allocating time for data backups. Manufacturers may have to hire additional IT support or contract out with third-party service providers.
Cloud PLM eliminates the cost and time spent maintaining hardware infrastructure and troubleshooting on-premises solutions. The savings in time and money can be spent on other strategic enterprise initiatives that support new product development and accelerate time to market.
Cloud reliably beats on-premises
The numbers support the TCO advantage of cloud versus an on-premises PLM solution. In addition to IT expenditures, cloud providers offer redundancy, mirroring, and failover coverage. Cloud PLM can therefore keep systems online and operational, boost security measures, and create a unified environment for users.
Taking superior reliability into account, as well as advantages in efficiency and adoption, faster access, and enhanced security, it’s clear how cloud PLM makes better TCO “cents” over time.