When it comes to software investment, the critical things to watch are how much you invest, how flexible the terms are, and what other expenses you can eliminate. It may seem like hosting software on-premises is the answer because it appears to give more control over cost; however, due to higher upfront costs and more sources for expenses, on-premises deployments are more unpredictable than a software-as-a-service (SaaS) ERP solution.
This principle is especially true for Microsoft Dynamics 365 Business Central. The current version of this Microsoft ERP system offers both an on-premises and a SaaS version. In another blog, we covered how you determine which version is right for you, but in this blog, we'll discuss specifically how the SaaS version allows you to predict costs and keep them low.
Let's take a closer look at a few factors you should consider.
How Flexible Is Your User Licensing?
Let's run some numbers. With Business Central on-premises, you pay $2800 for a license upfront to add a new user. Compare that with SaaS's $70 (for Essentials, $100 for Premium. See Pricing for more details) per month.
Now imagine a scenario where you expand your operations and start hiring more people. With on-premises, each time you hire, you have to pay this hefty up-front fee, whereas, with SaaS, you simply add the user to your subscription.
The same situation applies when you reduce your team size. With on-premises, this doesn't save you any money, but with SaaS, you can adjust your subscription at any time and reduce your cost. Are you scaling back up later? No problem! Just add those licenses back to your subscription then.
What About Annual Maintenance?
One of the drawbacks to on-premises software is the annual maintenance fees. Unless you have signed up for Microsoft's monthly annual maintenance fee solution, this fee is due once per year. It can be a sizable fee at one time and can affect your cash flow if not managed appropriately.
With SaaS, there is no Annual Maintenance. The value this fee provided is built into your subscription. So, if you thought the price was low before, how much better does it look now? All this means more predictable payments that guard your cash flow and make budgeting simple.
Do You Pay for Hosting Separately?
Some of you reading this likely have an on-premises deployment of Business Central or NAV hosted in a Cloud environment. That's great for helping your team access it from more places and enhancing your security, but it's likely you pay a separate subscription fee for the Azure or other Cloud service's hosting.
One added point of value for Business Central SaaS is that your hosting fees for Azure are built into the Business Central subscription price. You don't pay a separate line item for hosting in the Cloud. You get all the benefits of hosting your system on Azure without the extra subscription costs.
Is that $70/month looking even better now?
Do You Have Your Own Servers? There are Even More Savings for You!
The other group of people reading this blog are hosting their ERP on onsite servers. For you, the savings of switching from on-premises to the Cloud are even more significant. You eliminate so many additional expenses by moving to a SaaS, such as:
- Server hardware costs
- Network equipment
- Labor costs to maintain this hardware
- IT support
- Delays or inability to access your system when your hardware experiences a technical issue
This list barely scratches the surface on all the ways you can save by switching to Azure (in this case, through switching to Business Central SaaS). Find out more about all the ways you can save in our free Azure eBook.
The Bottom Line: Fewer Fees and Expenses + More Flexibility with SaaS
As you can see, your subscription with Business Central SaaS covers a lot more ground than on-premises equivalents. We've seen organizations reduce their overall IT expenses a great deal by switching, and even better, the expenses they do have are much more predictable and easier to plan for.
If you want to find out more ways that Business Central SaaS can help your business grow, I invite you to download our free eBook 4 Practical Reasons to Upgrade to Business Central in the Cloud. You'll see more about costs and three other reasons why switching to SaaS is a sound business decision for you.
We will also see you in a future blog to cover even more reasons to choose Business Central. Or feel free to browse our current Business Central pricing.
