1 OnBase Cloud Total Cost of Ownership Overview ECM customers have always had a wide range of options when it comes to selecting and deploying their chosen solution. This choice has expanded massively in the past few years with the increased availability of cloud-based ECM offerings. Unfortunately, this introduction has added an extra layer of complexity to the product selection process as comparing cloud and on-premises software solutions is not as straightforward as it may appear. Continue reading to: Discover where and why confusion occurs when comparing cloud and on-premises options Learn about the concept of total cost of ownership (TCO) as a basis for comparison Find a simple toolkit to allow easy comparison between on-premises and cloud solutions View a series of TCO illustrations for the OnBase solution Deployment Types OnBase customers can choose from three deployment options: on-premises (also known as premisesbased), perpetual hosted in the OnBase Cloud and subscription in the OnBase Cloud. Each of these has pros and cons for organizations at various points in their ECM journey. A brief summary of each is shown below. On-Premises An on-premises system is the classic in-house option. For the purposes of this paper, on-premises means that all hardware and software are purchased, operated, maintained and housed by the customer. This does not restrict the deployment of the solution in any way the organization may choose to provide their own private cloud access to the ECM solution from their own datacenters but the key aspect is that ownership and management rest with the customer. Perpetual Hosted The hosted solution provided by Hyland is a balanced approach that allows organizations to purchase the OnBase software as if they were headed towards an on-premises installation, but then host that software on the OnBase Cloud infrastructure. This approach works particularly well in two specific scenarios: 1. Where Capital expenditure is desirable: There are occasions where the cloud benefit of moving expenditure from a capital to an operating expense is not actually desirable. For example, in certain years an organization may wish to reinvest operating profits back into the business to reduce the overall annual profit and therefore reduce its tax bill. Alternatively, certain industries receive grants or subsidies towards IT projects in both of these cases, a degree of upfront spend such as a software purchase would be desirable.
2 Should the customer decide to leave the hosting service, the customer would retain ownership of its software and could decide to migrate to an on-premises installation or another hosting provider. 2. Migration from on-premises to cloud: A number of existing ECM users with on-premises deployments are migrating to the OnBase Cloud. They may be faced with the need to replace inhouse hardware, upgrade server operating system software, have lost key IT staff and cannot continue to manage their IT, or even simply cannot commit the resources internally to manage and grow their OnBase implementation. At the same time, many organizations are making the strategic decision to move their applications to cloud solutions. Alternatively, choosing the hosted option still gives the customer the option to move to an on-premises deployment in the future for no additional software costs. Subscription The OnBase Cloud subscription model works like most cloud-based solutions the customer pays a monthly fee for the right to use the software in a completely hosted environment. There is no purchase of software and no annual maintenance. Subsequently, when customers end their subscription, they then lose the ability to access OnBase. However, the user can choose to work with Global Cloud Services to bulk-extract their content from the OnBase Cloud prior to or immediately after their subscription has ended. Ultimately, beginning with a subscription model provides the greatest flexibility to OnBase end users. At any time, they have the ability to purchase outright all of the licenses and become a hosted solution as described above. Or, they may purchase outright all of the licenses AND migrate their data to their own infrastructure, thereby evolving into an on-premises environment. Total Cost of Ownership (TCO) Comparing on-premises and cloud solutions on a like-for-like basis can be challenging. An all-toocommon oversimplification is to compare the cost of software licenses directly with the subscription cost. Unfortunately, this method compares just 13 percent of the cost of the on-premises solution with 90 percent of the cost of the equivalent cloud offering. This does not provide an accurate comparison of costs over the life of the solution. Using a total cost of ownership (TCO) model helps to clarify things considerably. Total cost of ownership is a well-respected business method of estimation that provides a comprehensive view of the costs of a system. In this case, TCO covers all of the aspects of deploying an ECM solution. It includes the direct costs, such as license fees and annual maintenance, but also indirect costs, such as the IT staff and hardware required to run the ECM infrastructure.
3 TCO Components for an ECM Solution The components of an ECM solution vary dependent on the chosen deployment method. The chart below highlights costs to the end user for each of the three OnBase deployment methods. On-Premises Hosted Subscription Software Licenses & Annual Maintenance $ $ Hosting $ $ Subscription Fee $ Hardware Purchase, Maintenance & Installation $ Data Center Costs & Backups $ Server Operating Software Costs $ Server Application Costs $ OnBase Configuration $ $ $ IT Staff & Training $ $ $
4 Illustrations We have provided three illustrations below to highlight TCO across differing solution sizes. For each illustration, it is important to look at the TCO from two perspectives: cumulative and rolling total. A cumulative view looks at the total cost of ownership at any point in time i.e., after three years it will be the sum of the cost in years 1, 2 and 3. A rolling total allows you to compare year over year. This is particularly important because the cost of on-premises and hosted are more in the early years but less later on, while subscription is largely uniform across the years. Using both perspectives allows the business to take a complete and balanced view of the comparison. Please note the numerical values shown below are used purely for illustrative purposes and in no way should be used as an indication of OnBase pricing please contact your OnBase account manager for specific pricing. Small Solution A small-sized OnBase deployment provides an organization with a significant business benefit. The charts below show that for this size of implementation the on-premises costs will always be higher than hosted or subscription largely because of the in-house staffing costs. The hosted offering is slightly more expensive than subscription in the first year of operation, but cumulatively becomes the most costeffective option from year 4 onwards.
5 Medium-sized Again a medium sized OnBase deployment again will provide an organization with business benefit, but the larger solution will require an equivalent larger in-house investment in relevant infrastructure and staff. The charts below highlight this, and show that comparison ratios between this size of solution and the small solution are very similar. Large Solution A large OnBase deployment highlights some interesting aspects when comparing the various deployment options. First, the largest elements of the on-premises deployment tend to be staffing and infrastructure costs and these are significant. However, some large organizations may have spare capacity in terms of both of these, which will lead to a significantly closer comparison. It should be noted that even if infrastructure is already in place, it will need to be replaced/upgraded at some point in the future in this case the capital investment will simply occur at some other point in the four-year TCO calculation, as opposed to at the start. This is also relevant when looking at the rolling costs. Year two in our example shows the on-premises cost lower than the subscription costs however this closes over the next two years when taking salary increases into account. Again, at some stage a major infrastructure upgrade will be needed it s a case of when, not if.
6 Conclusions Moving any part of an organization s enterprise software suite to the cloud is about more than just cost; it is about efficiency, scalability, making better use of technology, and much more. But a number of organizations are not realizing the benefits of cloud solutions -- they believe cloud is too expensive as they have no means to properly compare the cost of deploying in the cloud versus deploying on-premises. This document has highlighted the different types of deployment offered for OnBase and has also provided details of the direct (software licenses, software maintenance, etc.) and indirect (staffing, hardware, backups, etc.) costs that make up the total cost of ownership for any given solution. The comparative illustrations provided show the true picture of the capital versus operating expense discussion that so often accompanies cloud conversation. However every situation is unique. Performing a top level comparison using the tools provided will deliver an initial, high-level comparison. However, if you would like a more detailed cost comparison based on your specific requirements please contact your OnBase account manager who will be glad to help. For More Information Visit the OnBase Cloud section of the OnBase.com website at for access to further information including brochures, information sheets, case studies and more. For technical, pricing and demonstration information, contact your Hyland account manager or
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