Just catching up on some research. I’m reading this note from Yankee Group on the Total Cost of Ownership (TCO) of on-demand applications versus on-premise, licensed software (What I like to call "Old School"). Specifically, this research talks about how this comparison affects SMBs and Mid-Market companies.
They compared two similar packages – NetSuite (On-Demand) and a combination of applications from Best Software (Old School). The results are shocking – if you make traditional software. At a 20 user level, the TCO over 5 years was 100% more for the old school solution. At 100 users, the TCO is 25% more for old school.
Obviously, this is only one example, but it does show that software delivered on-demand can save companies significant amounts of money, even over five years.