The license cost is the top of the iceberg
Above we visualize the total system investment using an iceberg graphic.
When investing in a locally installed system the direct cost consists of the initial purchase of licenses from the software provider. This would be the visible top of the iceberg. Indirect costs, such as hardware, maintenance fees and the time spent on operations by an internal IT staff is hidden below the surface.
When comparing to a SaaS-solution the visible direct subscription fee is higher than the license cost of an on-premise solution. There is no doubt that the top of the iceberg is larger. However, in the contractual subscription fee additional services such as data storage, maintenance and upgrades of the software are included.
Nevertheless when looking at the value of the software supplier contract it may seem more expensive with a SaaS-solution.