Systemic Differences between SaaS- and On-Premise-ERP
An Overview of a Qualitative Option Calculation Scheme
Keywords:
SaaS-ERP, On-Premise-ERP, Differences between SaaS and On- Premise, Calculation Scheme of IT-OptionsAbstract
A research-based calculation scheme of IT options will be developed based on systemic differences between SaaS- and On-Premise-ERP. The calculation scheme can compute relative cost differences between SaaS- and On-Premise, and thus bet- ter determine which ERP operating mode is more financially affordable in the particular case. The systemic differences have been researched through a multiple case study with four ERP producers. The data obtained has been substantiated by ERP literature in general and SaaS literature in particular. The com- parative total ERP cost was calculated by applying a total cost of ownership approach, which was modified to sum up only all relative cost differences rather than all absolute costs. This relative total cost approach enables the reader to compare the relative cost differences for each operation mode and in- cludes financing aspects; the fixed costs were discounted and interest rates (by debt and equity) were included to compen- sate for the investment differences between On-Premise- and SaaS-ERP. The classification and calculation scheme is limited in that the research method is qualitative. A quantification of the adoption factors determined by building strict relations between the systemic differences and the customer's charac- teristics, as well as standardization and weighting of the im- portance of the adoption factors is not the focus of this contri- bution and is left to other publications.
References
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[36] Umble, E.J., Haft, R.R. and Umble, M.M. (2003), “Enterprise resource plan- ning: Implementation procedures and critical success factors”, European Journal of Operational Research, Vol. 146 No. 2, pp. 241-257.
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[2] Benlian, A., Hess, T. and Buxmann, P. (2009), “Drivers of SaaS-Adoption – An Empirical Study of Different Application Types”, Business and Informa- tion Systems Engineering, Vol. 1 No. 5, pp. 357-369.
[3] Buxmann, P., Hess, T. and Lehmann, S. (2008), “Software as a Service”, Wirtschaftsinformatik, Vol. 50 No. 6, pp. 500-503.
[4] Choudhary, V. (2007), “Comparison of Software Quality under Perpetual Licensing and Software as a Service”, Journal of Management Informa- tion Systems, Vol. 24 No. 2, pp. 141-165.
[5] Cusumano, M.A. (2007), “The changing labyrinth of software pricing”, Communications of the ACM, Vol. 50 No. 7, pp. 19-22.
[6] Darke, P., Shanks, G. and Broadbent, M. (1998), “Successfully completing case study research: Combining rigour, relevance and pragmatism”, In- formation Systems Journal, Vol. 8 No. 4, pp. 273-289.
[7] Dubé, L. and Paré, G. (2003), “Rigor in Information Systems Positivist Case Research: Current Practices, Trends, and Recommendations”, MIS Quar- terly, Vol. 27 No. 4, pp. 597-635.
[8] Ellram, L.M., and Siferd, S.P. (1998), “Total Cost of Ownership: A Key Con- cept in Strategic Cost Management Decisions”, Journal of Business Logis- tics, Vol. 19 No. 1, pp. 55-84.
[9] Ellram, L.M. (1995), “Total cost of ownership”, International Journal of Physical Distribution and Logistics Management, Vol. 25 No. 8-9, pp. 4-23.
[10] Ellram, L.M. (1994), “A taxonomy of total cost of ownership models”, Jour- nal of Business Logistics, Vol. 15 No. 1, pp. 171-191.
[11] Farah, P. (2010), “Cloud computing or software as a service – which makes the most sense for HR?”, Employment Relations Today (Wiley), Vol. 36 No. 4, pp. 31-37.
[12] Fulford, R. and Love, P.E. (2004), “Propagation of an alternative enterprise service application adoption model”, Industrial Management and Data Systems, Vol. 104 No. 6, pp. 450-456.
[13] Gephart, R.P. (2004), “Qualitative Research and the Academy of Manage- ment Journal”, Academy of Management Journal, Vol. 47 No. 4, pp. 454- 462.
[14] Gill, R. (2011), “Why Cloud Computing Matters to Finance”, Strategic Fi- nance, Vol. 92 No. 7, pp. 43-47.
[15] Höss, O., Weisbecker, A. and Spath, D. (2009), “Software as a Service - Po- tenziale, Risiken und Trends”, Information Management and Consulting, Vol. 23 No. 4, pp. 6-11.
[16] Katzan Jr., H. and Dowling, W.A. (2010), “Software-As-A-Service Econom- ics”, The Review of Business Information Systems, Vol. 14 No. 1, pp. 27-37.
[17] Lehmann, S., Draisbach, T., Koll, C., Buxmann, H. and Diefenbach, P. (2010), “SaaS-Preisgestaltung: Bestehende Preismodelle im Überblick”, in: Ben- lian, A., Hess, T., Buxmann, P. (Eds.), Software-as-a-Service, Gabler, Wies- baden, pp. 155-169.
[18] Link, B. (2013), “Considering the Company’s Characteristics in Choosing between SaaS vs. On-Premise-ERPs”, Wirtschaftsinformatik Proceedings 2013, pp.°261-277.
[19] Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J. and Ghalsasi , A. (2010), “Cloud Computing – The Business Perspective”, Decision Support Sys- tems, Vol. 51 No. 1, pp. 176-189.
[20] Mathew, M. and Nair, S. (2010), “Pricing SaaS Models: Perceptions of Busi- ness Service Providers and Clients”, Journal of Services Research, Vol. 10 No. 1, pp. 51-68.
[21] Matros, R., Rietze, C. & Eymann, T. (2010), “SaaS und Unternehmenser- folg: Erfolgskategorien für die Praxis”, in: Benlian, A., Hess, T., Buxmann, P. (Eds.), Software-as-a-Service, Gabler, Wiesbaden, pp. 239-254.
[22] Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis. An Ex- panded Sourcebook (2nd ed.), Sage Publications, Thousand Oaks, Lon- don, New Delhi.
[23] Palanisamy, R., Verville, J., Bernadas, C. and Taskin, N. (2010), “An empirical study on the influences on the acquisition of enterprise software deci- sions: A practitioner’s perspective”, Journal of Enterprise Information Management, Vol. 23 No. 5, pp. 610-639.
[24] Poppo, L. and Zenger, T. (1998), “Testing Alternative Theories of the Firm: Transaction Cost, Knowledge-Based, and Measurement Explanations for Make-or-Buy Decisions in Information Services”, Strategic Management Journal, Vol. 19 No. 9, pp. 853-877.
[25] Pozzebon, M. and Pinsonneault, A. (2005), “Global–local negotiations for implementing configurable packages: The power of initial organiza- tional decisions”, Journal of Strategic Information Systems, Vol. 14 No. 2, pp. 121-145.
[26] Ragowsky, A., and Somers, T. M. (2002), “Special Section - Enterprise Re- source Planning”, Journal of Management Information Systems, Vol. 19 No. 1, pp. 11-15.
[27] Rai, A. and Sambamurthy, V. (2006), “The Growth of Interest in Services Management: Opportunities for Information Systems Scholars”, Informa- tion Systems Research, Vol. 17 No. 4, pp. 327-331.
[28] Sääksjärvi, M., Lassila, A. and Nordström, H. (2005), “Evaluating the soft- ware as a service business model: From CPU time-sharing to online in- novation sharing”, Perspective 2000, pp. 177-186.
[29] Sammon, D., Adam, F. and Carlsson, S. (2009), “CSF Relationships in ERP Project Implementations: A Collective Case Study”, in AMCIS 2009 Pro- ceedings, paper 744.
[30] Smith, J., Schuff, D., and Louis, R.T. (2002), “Managing Your IT Total Cost of Ownership”, Communications of the ACM, Vol. 45 No. 1, pp. 101-106.
[31] Soh, C. and Sia, S.K. (2004), “An institutional perspective on sources of ERP package–organisation misalignments”, Journal of Strategic Information Systems, Vol. 13 No. 4, pp. 375-397.
[32] Sontow, K. and Kleinert, A. (2010a), “ERP-as-a-Service zwischen Euphorie und Skepsis”, Industrial Engineering, Vol. 3, pp. 10-18.
[33] Sontow, K. and Kleinert, A. (2010b), “Software as a Service – Die schlanke Zukunft für ERP-Lösungen? Ergebnisse eine Anwenderbefragung”, ERP Management, Vol. 6 No. 4, pp. 24-27.
[34] Strauss, A.L. and Corbin, J. (1998), Basics of Qualitative Research: Proce- dures and Techniques for Developing Grounded Theory (2nd ed.), Sage Publications, Thousand Oaks, London, New Delhi.
[35] Thomas, O. and vom Brocke, J. (2009), “A value-driven approach to the design of service-oriented information systems - making use of concep- tual models”, Information Systems and E-Business Management, Vol. 8 No. 1, pp. 67-97.
[36] Umble, E.J., Haft, R.R. and Umble, M.M. (2003), “Enterprise resource plan- ning: Implementation procedures and critical success factors”, European Journal of Operational Research, Vol. 146 No. 2, pp. 241-257.
[37] vom Brocke, J., Recker, J.C. and Mendling, J. (2010), “Value-oriented pro- cess modeling: integrating financial perspectives into business process redesign”, Business Process Management Journal, Vol. 16 No. 2, pp. 333- 356.
[38] Vom Brocke, J., Simons, A., Niehaves, B., Riemer, K., Plattfaut, R. and Clev- en, A. (2009), “Reconstructing the Giant: On the Importance of Rigour in Documenting the Literature Search Process”, 17th European Conference on Information Systems, pp. 3226-3238.
[39] vom Brocke, J., Sonnenberg, C. and Simons, A. (2009), “Value-oriented Information Systems Design: The Concept of Potentials Modeling and its Application to Service-oriented Architectures”, Information Systems and E-Business Management, Vol. 8 No. 3, pp. 223-233.
[40] vom Brocke, J. (2007), “Service Portfolio Measurement: Evaluating Finan- cial Performance of Service-Oriented Business Processes”, International Journal of Web Services Research, Vol. 4 No. 2, pp. 1-32.
[41] Waters, B. (2005), “Software as a Service: A look at the customer benefits”, Journal of Digital Asset Management, Vol. 1 No. 1, pp. 32-39.
[42] Watjatrakul, B. (2005), “Determinants of IS sourcing decisions: A compar- ative study of transaction cost theory versus the resource-based view”, Journal of Strategic Information Systems, Vol. 14 No. 4, pp. 389-415.
[43] Weiping, L. (2009), “An analysis of new features for workflow system in the SaaS software”, in ICIS 09 Proceedings of the 2nd International Con- ference on Interaction Sciences: Information Technology, Culture and Human, pp. 110-114.
[44] Xin, M. and Levina, N. (2008), “Software-as-a-Service Model: Elaborating Client-Side Adoption Factors”, in ICIS 2008 Proceedings, paper 86.
[45] Yin, R.K. (2003), Case Study Research, Design and Methods, Sage Publica- tions, Thousand Oaks, London, New Delhi.
Published
2018-08-23
How to Cite
[1]
Back, A. and Link, B. 2018. Systemic Differences between SaaS- and On-Premise-ERP: An Overview of a Qualitative Option Calculation Scheme. AIS Transactions on Enterprise Systems. 2, 1 (Aug. 2018).
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