Churn Rate For On-Demand (Software as a Service) Solutions
From an email I received from Frontrange Solutions looking at tradeoffs of internal versus SaaS.
“Though many are jumping on the on-demand bandwagon, many are also jumping off. Churn rates for on-demand are as high as 30 percent while renewal rates with on-premise software stand in the 80 percent range. There must be a reason an increasing number of organizations that tried on-demand applications have returned to an on-premise solution. For reasons such as:
- total cost of ownership
- ease of customization
- control of data
- process automation options
- user-interface
- disaster recovery
What this doesn’t seem to show is whether those who drop out of SaaS go to an internal solution or just stop doing that SaaS function. This needs more study.
After the recent disaster where the building where we host our mission critical applications (with its backup generators, etc) was without electricity for two days, we are actually investigating getting our email and other functions out onto a data center ourselves. It is more expensive since we have already invested in infrastructure and IT services. But it may be worthwhile for disaster recovery. Of course the questions of what if the data center has a disaster itself, how do we keep long term backups, etc. are still unanswered.
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Project Prediction Infographic
Dan when you host your email and data in the cloud you are protected from disaster. The large providers like Google and Amazon have multiple data centres that will be able to support your business even if there is an earthquake for example in one place your service is provided from an alternate location.