IT SERVICE MANAGEMENT: HOW THE SAAS APPROACH DELIVERS MORE VALUE

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1 1 IT Service Management: How the SaaS Approach Delivers More Value IT SERVICE MANAGEMENT: HOW THE SAAS APPROACH DELIVERS MORE VALUE EXECUTIVE SUMMARY Today s companies are very reliant on their technology infrastructures. Every employee at every type of organization, large or small, depends on a variety of systems to perform their most important tasks. In fact, a study published by Applied Computer Research states that, at the average firm, the ratio of PCs to IT personnel is 25-to-1. Because technology assets are so crucial to the smooth, successful execution of day-to-day business operations, more and more companies are embracing IT service management (ITSM) strategies. ITSM, as defined by Wikipedia, is a discipline for managing information technology (IT) systems, philosophically centered on the customer s perspective of IT s contribution to the business. ITSM stands in deliberate contrast to technology-centered approaches to IT management and business interaction. In other words, unlike traditional approaches to IT management, which focuses solely on improving internal productivity and cost-efficiency, IT service management facilitates the management of technology infrastructures in a way that directly and positively impacts business users, and effectively satisfies their needs. There are many benefits that can be achieved through the implementation of a comprehensive ITSM strategy, including improved alignment of IT operations with end user needs, as well as revenue and retention goals, and better insight into how technologies affect the end user experience. ITSM can also enhance the allocation of IT resources and assets to better address end user requirements, enable more rapid identification and correction of problems that may exist in the technology environment, and allow for more intelligent and informed IT budgeting and spending. While the benefits of ITSM are clear, significant challenges arise when companies evaluate and select the required supporting tools. The toughest decision they face is deciding which deployment approach onpremise or software-as-a-service (SaaS) will be the most economical, and offer the most value. In this white paper, we will closely compare SaaS-based ITSM solutions to on-site tools, and highlight the benefits that the SaaS model delivers. We will also demonstrate why SaaS ITSM tools are far more costeffective, using proven research, statistics, and industry benchmarks, and show how over the first three years they can deliver greater return on investment and lower total cost of ownership over their onpremise counterparts. And, because the expenses associated with both on-premise and SaaS-based ITSM tools can vary greatly from company to company, due to such factors as the number of users, we will provide an intuitive calculator that will make it easy for readers to more precisely determine both the costs and the potential savings they can expect with each approach, based on their specific needs and environment.

2 2 IT Service Management: How the SaaS Approach Delivers More Value SAAS-BASED ITSM: THE SMARTER CHOICE A well-planned and executed IT service management initiative will deliver tremendous benefits, whether a company chooses a SaaS-based solution (also known as on-demand, hosted, or Web-hosted) or an onpremise one to support it. But, the substantial values that can be derived through the implementation of a SaaS system have been proven to be far greater. WHAT MAKES SAAS ITSM THE SMARTER CHOICE? IT S MORE ECONOMICAL On-site ITSM solutions can be very hard on the budget. There is the high cost of software licenses, plus the need to acquire servers and other hardware to consider. Plus, there are annual maintenance costs and the often-ignored cost of forced upgrades to the vendor s latest version (even if it doesn t add any value to your implementation). SaaS-based IT service management tools, on the other hand, require no initial investment. A pay-as-you-go pricing structure, typically based on system usage, makes them far more affordable and budget-friendly. IT S FASTER TO IMPLEMENT On-premise ITSM solutions can be quite cumbersome to deploy. There are licenses to allocate, software to distribute and install on PCs, servers to test, and more. These time-consuming tasks can place a huge strain on already overburdened IT teams, distracting them from other, more strategic IT projects. But, with SaaS ITSM, the entire application and all supporting components are already up and running at the service provider s site. This significantly reduces both the time and costs required for deployment and rollout. In fact, many SaaS ITSM solutions can be utilized within hours of subscription. IT S SIMPLER TO USE Many on-site ITSM tools can be highly sophisticated and complex to use. As a result, extensive training is required in order to make end users proficient. However, their SaaS counterparts often have interfaces that are far more intuitive in some cases, as easy to use as other popular Web applications like Gmail. So, IT staff can begin utilizing the new environment almost immediately, with little or no training required.

3 3 IT Service Management: How the SaaS Approach Delivers More Value IT S EASIER TO ADMINISTER All software applications require ongoing maintenance and IT service management is no exception. There are bug fixes, enhancements, upgrades, and troubleshooting when there are performance issues. With on-premise ITSM, all this must be handled by internal staff, which takes time away from other valuable activities. But, with SaaS ITSM, all monitoring, administration, upgrades to newer versions, and other tasks are the responsibility of the service provider, freeing IT staff from the related hassles. IT S LESS RISKY On-premise deployments are notorious for wasting way more time and money than originally anticipated. As a result, many companies end up abandoning projects mid-stream, or are forced to justify the added effort and expense to senior management placing increased scrutiny on their initiative and adding to the already monumental pressure to demonstrate return on investment quickly. In fact, according to Robert Lewis, president and founder of IT Catalysts, IT project failure rates average close to seventy percent. But, since SaaS implementations are fast and problem-free, the risk of project delays or over-expenditures is virtually eliminated. IT S MORE RELIABLE In order to keep an on-site ITSM system available and accessible at all time, IT staff would have to work around the clock, instantly responding to any issue, no matter when it occurs. This includes not only technical problems like application glitches or server failures, but power outages or natural disasters that destroy infrastructure. Given their busy project schedules, and often conflicting priorities, this is simply not feasible. Conversely, all leading SaaS vendors are equipped with state-of-the-art data centers that include a variety of solutions, such as redundant servers, back up power sources, and 24 x 7 monitoring capabilities, designed to ensure continuity and minimize downtime.

4 4 IT Service Management: How the SaaS Approach Delivers More Value SAAS VS. ON-PREMISE ITSM: COMPARING THE RETURNS When it comes to IT service management, quantifying the benefits of the SaaS approach, as opposed to the on-premise model, is quite easy. Some of the areas in which the most substantial potential savings can be realized include: LOWER LICENSING FEES The cost of getting started with an on-premise ITSM tool will seem astronomical when compared to the annual fees for a SaaS solution. SaaS ITSM can be acquired for as low as $500 per user per year. So, for a company with an IT support team made up of 20 professionals, robust ITSM capabilities can be leveraged for as low as $10,000 annually. Additionally, unlike on-premise tools, SaaS vendors do not charge extra to provide end users with access to the systems self-service capabilities. For example, end users can open a new ticket, check on the status of open incidents, or retrieve FAQs from the integrated knowledgebase at no additional cost. On-premise tools, on the other hand, come with a very high initial price tag. Many can cost tens of thousands of dollars in just license fees alone before other expenses, like ongoing maintenance and consulting, are considered. For example, many on-premise ITSM vendors charge as much as $1,800 per license. For a company with an IT support team that is 20 people strong, this would amount to $36,000. And, many vendors also charge extra when companies want to make certain self-service capabilities, such as issue tracking, available to end users as much as 10 percent of the cost of a full license, or $180 each. Of course there are discounts as the number of end users scales up. So, if you assume a ratio of 50 employees to every one support staff member (1,000 end users for a company with a service desk made up of 20 professionals), and estimate a cost of about $50 per end user license, then upfront license fees will be increased by another $50,000. This makes it difficult to achieve rapid ROI, and renders the solution cost-prohibitive for many budget-conscious companies. NO INFRASTRUCTURE REQUIREMENTS SaaS solutions eliminate the need for additional infrastructure, such as database servers, server software licenses, and hardware. With on-site ITSM systems, companies would have to pay approximately $5,000 for each server required to support the application. Additionally, there is security, reliability, and availability to consider. SaaS vendors already have the appropriate mechanisms in place to optimize performance, and preserve the integrity of applications and related data. Companies who purchase on-premise systems, however, would need to make investments in additional hardware components, such as redundant servers stored in multiple and/or remote locations, in order to achieve the same level of protection. So, conservatively assuming that a company would need two servers one to support the application itself, and one to support redundant or back-up operations an on-premise ITSM solution would require an initial upfront investment in infrastructure of $10,000.

5 5 IT Service Management: How the SaaS Approach Delivers More Value FASTER, MORE COST-EFFICIENT DEPLOYMENT On-premise ITSM applications take much, much longer to implement than those that are SaaS-based. Hardware must be purchased, then installed, provisioned, and tested. The solution must then be integrated with the rest of the IT infrastructure, and rolled out to end users. This can take weeks, or even months in some cases, and require the undivided attention of IT staff, as well as the assistance of external consulting resources. For example, the typical on-site ITSM solution can take as long as six weeks to integrate and deploy at a cost of about $6,000 per week in external consulting fees. That brings total deployment expenses for an on-premise IT service desk to a whopping $36,000. But, SaaS IT service management systems take only about two weeks to integrate and deploy, cutting implementation expenses to just $12,000. REDUCED CONSULTING NEEDS On-premise ITSM tools are notorious for requiring extensive maintenance and upgrades that must be performed by expert consultants who charge ridiculously high hourly rates. Why? Because moving to a newer version of an on-site ITSM software application, like HP or BMC Remedy, often requires complex reconfigurations, making them just as time-consuming as the initial implementation. In most typical client/server scenarios, the annual cost of the work these consultants perform can amount to almost the same amount as yearly vendor maintenance charges or approximately 20 percent of total license costs. So, a company that makes an initial investment of $86,000 in an on-premise ITSM solution could end up spending an additional $34,400 in ongoing administration in years two and three combined, assuming that they only upgrade once during that period. That is certainly not a desirable position to be in. SaaS removes the dependence on high-cost consulting services, since all ongoing maintenance and upgrades are performed by skilled and knowledgeable staff at state-of-the-art data centers. All administration and enhancements are non-disruptive, and included in the price of the service. So, there are never any added fees or effort required for upgrades, new features and functionality, or support. MINIMIZED INTERNAL STAFFING REQUIREMENTS Other on-site solutions require significant time for administration of servers, databases, and other hardware. In fact, some studies show that the average IT professionals can spend as much as 8 weeks the equivalent of 320 hours each year performing routine administration of an on-premise ITSM system. At a rate of $41 per hour that can put an added strain on IT budgets to the tune of more than $13,120 annually or more than $39,000 over a three-year period. With SaaS-based solutions IT resources are freed from day-to-day administration, so they can focus on more strategic technology initiatives that have a positive impact on the bottom line. SaaS vendors work tirelessly to monitor, manage, and enhance the environment, and keep all hardware and other components performing at peak levels.

6 6 IT Service Management: How the SaaS Approach Delivers More Value CALCULATING THE COST SAVINGS When it comes to IT service management, it s a proven fact that the SaaS model delivers far greater and faster returns than on-premise deployments. And, while the case made earlier in the paper is quite compelling, when you compare the numbers side-by-side, the evidence is even more powerful. The calculator below uses the industry-standard statistics, benchmarks, and averages highlighted throughout this paper. Formulas and numbers can be adjusted accordingly to more precisely estimate the potential ROI your own company can expect to achieve. Cost Item Formula SaaS ITSM On-Premise ITSM Initial Purchase/ Licensing (Service Desk Staff) Initial Purchase/Licensing (End Users) Vendor Maintenance Fees 20 Help Desk Staff Members X Cost per User ($1,800 for on-premise, $500 for SaaS) 1,000 Employees X $50 (Cost for End User Portal Access) $10,000* $36,000 N/A $50,000 Total licensing costs X 20% N/A $17,200** Supporting Infrastructure 2 (number of servers needed) X $5,000 N/A $10,000 Deployment & Integration Number of weeks (6 for on-premise, 2 for SaaS) X $6,000 $12,000 $36,000 Consulting $17,200 (initial license costs) N/A $17,200** Ongoing Hardware Maintenance 320 (number of hours of annual administration) X $41 (hourly rate for IT technician) N/A $13,120* * Recurring annual costs **Year 2 and 3 costs Total costs (first year) $22,000 $145,120 Total Costs (three years) $42,000 $240,160

7 7 IT Service Management: How the SaaS Approach Delivers More Value SAMANAGE: ON-DEMAND SERVICES FOR SUCCESSFUL IT SERVICE MANAGEMENT SAManage is a leading provider of robust, SaaS-based IT management solutions; including IT asset management and IT service management. Our exciting new IT service management system, based on the widely-adopted ITIL framework of best practices in IT management, empowers organizations to better align technology support process with strategic business goals, and enables them to deliver superior service to the end user community. With ITSM from SAManage, companies can: Streamline, automate, and enhance key IT support processes Better utilize IT resources Boost staff efficiency Dramatically reduce support-related costs Accelerate responsiveness to end users Improve collaboration and communication between those that use IT systems, and those that service them And, because it s seamlessly integrated with the SAManage IT asset management solution, our ITSM tools can instantly correlate incidents to individual components within the technology infrastructure, for a more complete view of each asset s history, and end-to-end tracking of all repairs and administration. KEY FEATURES INCLUDE: Convenient ticket submission. Users can submit support requests through a personalized support page, or via a dedicated support address. Real-time ticket tracking. Both support staff and end users can log into the support portal to view the status of open tickets. Open collaboration. Support team members and end users can easily communicate about ticketrelated issues. Additionally, staff can view tickets being handled by the entire group, and share workloads with their peers. Dynamic knowledge capture. Comments and resolutions can be added to each ticket, then stored for future reference, serving as a knowledge repository that can accelerate the handling of similar issues in the future. POWERFUL AND SECURE SAAS SOLUTIONS All SAManage solutions are built and delivered via a pure SaaS-based model. This approach completely eliminates the time and expense associated with implementation. There are no servers to manage, and no software to install. Enterprise-wide deployments can be completed in just minutes, and new features and enhancements are available frequently and immediately. SAManage offers a free trial period that allows you to try before you buy. To find out more and start your free trial, visit our Web site at.