Total cost of ownership ("TCO") includes all the costs to run a system over its lifetime, and is the best metric to compare the costs of cloud computing and installed software. It not only incorporates the fees paid to vendors, but also equipment and staff costs. This provides the most accurate cost analysis for running a student information system.
After examining the total expenditures for both systems, the more cost-effective option is clear -- cloud computing offers a lower TCO than installed software. It requires less up-front investment and lower long-term operating costs.
For a line-by-line analysis, download the following cost comparison spreadsheet and calculate the TCO for your environment:
With traditional software, customers pay hefty startup costs. They pay for licenses, hardware and software purchase and installation costs, security and monitoring setup, and much more.
Cloud computing has low startup costs. Customers subscribe at an annual or monthly flat rate. There's no cost for hardware or software purchase and deployment. Users just log in and use the Cloud. They access highly available systems engineered to support thousands of users.
Traditional software typically requires dedicated headcount to manage a student information system. Over time, this additional IT staff usually becomes the system's largest cost. This expense is unnecessary for cloud users systems and yields significant savings.
With lower expenditures, districts can choose between several desirable options. They can operate with smaller IT staffs for budgetary flexibility. They can undertake important projects that were previously impossible with existing staff. Or, since many have teaching backgrounds, IT staffers can teach a few classes to provide class size reduction and scheduling flexibility. Regardless of the district's choice, cloud computing frees up headcount and previously unavailable funds.
Comparing the Cloud to traditional software is really an "apples to oranges" comparison. It's important to understand the differences between these technology approaches and the value they deliver. Most customers are unwilling to accept inferior traditional software at the same price as superior cloud service.
Cloud computing systems are highly available (indicating at least 99.9% uptime) with redundant parts. Vendors employ specialized technologists to monitor their systems 24/7/365. They are constantly updated, heavily protected against intrusion, and expertly managed. Thanks to large investments in technology and expertise, cloud vendors offer reliable systems that simply work.
Most traditional software systems can't compare to the high availability and dependability of cloud-based systems. This less reliable system leads to unexpected downtime that is disruptive to users' work routines.
For most districts that desire high availability, cloud computing is the only viable alternative. It's impractical for most customers to build highly available systems.
When choosing between comparably priced cloud computing and traditional software, remember that the Cloud gives you more.
Software salesmen may tout installed software as cheaper than cloud-based systems. They'll show a ten-year comparison of all fees paid to software and cloud vendors. As the fees to software vendors are typically lower than those to cloud vendors, they'll assert that software is less expensive.
This comparison neglects costs not paid directly to vendors but still borne by districts. The "hidden" costs of installed software are large and much higher than those for cloud computing. This is makes intuitive sense considering districts get more with the Cloud and have fewer expenses.
It's important to consider TCO in addition to vendor fees when assessing system cost. It is the proper metric to compare installed software and the Cloud. Accounting for all costs, cloud computing is clearly the better choice.
Yes. Most installed systems require a half- or full-time employee to run effectively.
Without proper staffing, service quality and user satisfaction suffer. This naturally occurs when proper resources and time aren't allocated towards maintenance, management, and ongoing support.
No, not if opportunity costs are considered.
IT is often stretched thin juggling all the district's technology needs. With cloud computing, IT staff are freed to work on other projects or possibly teach classes for the district. Using cloud computing is like getting a new headcount for the IT department.
Of course, assuming you don't want a highly available system.
You can lower any system's cost by reducing its quality. It's unusual, however, for districts to intend to purchase an unreliable system. They usually want a great experience. Cost-saving decisions will hinder user satisfaction with a system.
There are many ways to cheaply implement a weaker system. Regular server patching could be skipped, but that leaves the system vulnerable to intrusion. Nightly backups could be omitted, but failures might lead to data loss. Monitoring could be relaxed, but then tech staff wouldn't be aware of downtime until users notified them. The system could be installed on a shared server, but then all other applications would be affected when processing large reports or other big jobs.
Ultimately, users should question whether they'd be happy with a system that's been cheaply implemented. Thanks to the advent of cloud computing, users no longer need to compromise.