Daily Archives: March 2, 2009

Recent Additions to the Resource Site

The Sourcing Innovation Resource Site, always immediately accessible from the link under the “Free Resources” section of the sidebar, continues to add new content on a weekly, and often daily, basis. Unlike many “resource”, “best of”, or “portal sites” that are abandoned almost as quickly as they are thrown together, the resource site is actively maintained (and dead links are removed on a regular, usually weekly, basis).

In fact, there have been over 75 resource additions in the past week alone, including:

  • 8 new conferences,
  • 29 new archived webcasts, and
  • 37 new upcoming webcasts.

In addition, the resource site now tracks on-line (free and paid) press release services that you can use to distribute your press releases that advertise your offerings, (human-edited) web directories that will assist you in finding resources outside of the supply chain that may be helpful with other aspects of your business, and (human-edited) blog directories that track blogs with a business, but not necessarily supply chain, focus. And it just introduced a new glossary that currently contains over 20 detailed definitions, and discussions, of common supply chain terms and technologies. This glossary, whose entries act as a starting point in your search for additional information, will grow in size and content over time, but right now you can dive into:

Contract Management
Cost Reduction
Decision Optimization
e-Sourcing Software
Global Sourcing
Global Trade
Green Supply Chain
Inventory Management
Logistics Management
Procurement Process
Purchasing Best Practices
Reverse Auction
RFX (RFB/RFI/RFP/RFQ)
Risk Management
Service Management
Strategic Sourcing
Supplier Management
Supply Chain Finance
Supply Chain Forecasting
Supply Chain Management
Supply Management
Sustainable Supply Chain
Talent Management

The total number of unique, active resources exceeds the 2,000 mark, and breaks down as follows:


And includes the following recent additions, among many others:

Supply Chain Conference Listings

Dates Conference Sponsor
2009-Mar-1 to
  

2009-Mar-3

SCCE Utility and Energy Conference
  

Houston, Texas, USA (North-America)

SCCE
2009-Apr-29 to
  

2009-May-1

Demand Planning & Forecasting: Best Practices Conference
  

Las Vegas, Nevada, USA (North-America)

IBF
2009-Apr-29 to
  

2009-May-1

Gartner Risk Management and Compliance Summit
  

Chicago, Illinois, USA (North-America)

Gartner
2009-May-18 to
  

2009-May-20

World Conference on Quality and Improvement
  

Minneapolis, MN, USA (North-America)

ASQ
2009-Jun-18 to
  

2009-Jun-19

21st European Forum for External Trade, Excise and Customs
  

Linz, Austria (Europe)

EFA

Archived On-Demand Supply Chain Webcasts

Original Date Webcast Sponsor
2008-Jan-1

00:00 GMT/WET

Closed Loop Spend Management Management Dynamics
2008-Jan-1

00:00 GMT/WET

Service Part Smarts: Profit-Driven Strategies for Service Parts Supply Chains Logility
2008-Apr-1

00:00 GMT/WET

Roadmap to Profitable Cross-Channel Allocation and Order Management Manhattan Associates

Upcoming Supply Chain Webcasts

Date & Time Webcast
2009-Mar-3

11:00 GMT-08:00/AKDT/PST

Enterprise Efficiency and Mitigating Risk. The Procurement and Outsourcing Professionals’ Contribution through Records and Imaging
  

Sponsor: SIG

2009-Mar-4

11:00 GMT-08:00/AKDT/PST

The Cost Cutting Conundrum
  

Sponsor: Coupa

2009-Mar-6

11:00 GMT-05:00/CDT/EST

The Smarter Supply Chain of the Future
  

Sponsor: SCC

2009-Mar-11

14:00 GMT-04:00/AST/EDT

Sourcing Best Practices in Today’s Economy
  

Sponsor: Purchasing

2009-Mar-24

8:00 GMT-07:00/MST/PDT

Coping With The Economic Downturn: How Contract Management Automation Can Deliver Savings
  

Sponsor: IACCM

which are all readily searchable from the comprehensive Site-Search page. So don’t forget to review the resource site on a weekly basis. You just might find what you didn’t even know what you were looking for!

And continue to keep a sharp eye out for new content and even more new content categories which will be coming on-line in the near future!

Uncovering the True Cost of On-Premise Sourcing & Procurement Software

Coupa recently released a good white-paper that did a great job exposing the true costs of On-Premise Software and why Software-as-a-Service, even with its annual license fee, can be much cheaper, especially when one does the long term calculation. Whereas SaaS generally has just two costs, the annual license fee and training costs, which are usually nominal as most of today’s SaaS technology is starting to utilize B2B 3.0 technology, which is more-or-less self-explanatory, on-Premise software has a host of up-front and hidden costs. In addition to the up-front perpetual license fee and installation costs, which can sometimes run into the seven (and even eight) figure range, you typically have additional up-front costs for required support software (such as databases and application servers) and hardware (as you need to buy production, backup, and QA servers and storage area networks). Then, you have annual maintenance fees, every few years you have to upgrade — or risk losing support for the version of the product you are on, and every few years you’ll have to upgrade your hardware as well. Finally, you have on-going training and re-training costs and, more importantly, on-going internal support costs that consists of the salaries of the system administrators and user support representatives that you need to maintain the system and support the users — and when you consider that you will need one support representative for every 25 to 35 users in a typical organization, these costs will quickly dwarf the acquisition costs.

Consider the following example for an average mid-size business over five-year and ten-year time horizons. Assuming that a perpetual license to an e-Procurement solution could be obtained for $150,000 and that maintenance could be negotiated at a mere 25%, by the time you factor in the need for six servers (for production, back-up, and QA before patches are applied in production) which need to be replaced roughly every three years, database software, application server software, upgrade costs at roughly $40,000 to $60,000 a pop every three years, initial implementation costs, training, and internal support costs which consist of a system administrator who likely makes at least $90,000 a year at 50% utilization and two support representatives who each make at least $60,000 a year, you end up with a fully burdened total cost of ownership that is anywhere between $150,000 and $240,000 a year! Compare this to a SaaS system, like Coupa, that can be obtained, depending on the size of your organization and e-Procurement needs, for somewhere between $25,000 and $50,000 a year. Now, it’s true that not all on-premise solutions will be this expensive and not all SaaS solutions will be this cost-effective, but it will usually be the case that the fully-burdened cost of traditional on-premise enterprise software will be significantly more expensive than SaaS.

5-Year Amortized Solution Cost

Cost On-Premise SaaS
License 150,000 210,000
Maintenance 187,500 0
Upgrade 60,000 0
Hardware 60,000 0
Database 56,250 0
Application Server 56,250 0
Implementation 60,000 0
Internal Support 825,000 0
Training 50,000 25,000
Total 1,505,000 235,000
SaaS Savings   1,270,000
10-Year Amortized Solution Cost

Cost On-Premise SaaS
License 150,000 420,000
Maintenance 375,000 0
Upgrade 180,000 0
Hardware 90,000 0
Database 87,500 0
Application Server 87,500 0
Implementation 60,000 0
Internal Support 1,650,000 0
Training 50,000 25,000
Total 2,730,000 445,000
SaaS Savings   2,285,000

What should you conclude from this? Simply that you should only choose an on-premise solution over a SaaS solution if:

  • the SaaS solution is not evolved enough to meet your needs and
  • the additional ROI you expect from the on-Premise solution is more than enough to cancel out the extra costs associated with an on-Premise solution for the next three to five years (as you’ll be stuck with the solution at least that long, whereas most SaaS providers allow you to go month to month after an initial six to twelve month contract).

For example, if you expect that the on-Premise solution will save you $400,000 a year in efficiency improvements and cost savings, but that the best SaaS solution, which is still evolving, would only save you $200,000 a year, and the on-Premise solution only cost $50,000 more per year than the SaaS solution in a fully-burdened calculation, then the on-Premise solution would likely be the way to go (since, over 5 years you could save as much as 750,000 over and above the expected returns from the SaaS solution). However, if the on-Premise solution cost $150,000 more per year than the SaaS solution, then the cost-savings are minimal, then SaaS would likely be the right solution, especially once you consider the other benefits and the fact that SaaS solutions mature rapidly and, within a year or two, could offer more savings potential then the on-Premise solution.

To run your own calculations, download the Excel Side-By-Side Costing Template that allows you to quickly and easily compute the expected 1-year, 3-year, 5-year, 7-year, and 10-year costs of on-premise vs. hosted ASP vs. SaaS, and the expected cumulative savings of going with a SaaS solution.