Chances are, every major application running on your servers has a cloud-hosted SaaS equivalent. But "available" doesn't mean "worth switching to." This is a framework for evaluating SaaS alternatives the right way - without getting sold by a vendor demo.
Step 1: Inventory What You're Actually Running On-Premises
Before you evaluate anything, you need a clear picture of your current application landscape. For each on-premises application, document:
- What business function it serves and which team uses it
- The current annual cost (licensing, maintenance, server hardware, IT overhead)
- The version currently deployed and its end-of-life date
- Integration dependencies - what other systems does it connect to?
- Data volume and storage requirements
- Compliance constraints (HIPAA, PCI-DSS, FINRA, CMMC, etc.)
- Current performance, uptime, and user satisfaction
This inventory is the foundation. Without it, you're comparing a vendor pitch to a vague memory of your current costs.
Step 2: Identify Whether a SaaS Alternative Exists
For most categories of business software, SaaS alternatives exist and are mature:
- Email/Collaboration: Exchange → Microsoft 365 / Google Workspace
- CRM: On-prem CRM → Salesforce, HubSpot, Microsoft Dynamics 365
- ERP/Accounting: On-prem ERP → NetSuite, Sage Intacct, Microsoft Dynamics 365 Business Central
- HR/Payroll: On-prem HRIS → Workday, BambooHR, Rippling
- File Storage: On-prem file servers → SharePoint/OneDrive, Box, Google Drive
- Phone Systems: On-prem PBX → Microsoft Teams Phone, RingCentral, 8x8
- Business Intelligence: On-prem BI → Power BI (cloud), Tableau Online, Looker
For specialized industry software (healthcare EMR, legal case management, manufacturing MES), SaaS options are increasingly available but require more careful vetting. Resources like G2 and Capterra are useful for finding and comparing alternatives in specific categories.
Step 3: Build a True Apples-to-Apples Cost Comparison
This is where most evaluations go wrong. Vendors quote per-seat per-month pricing. You need to calculate total cost of ownership across a 3-year horizon on both sides:
On-premises total cost includes:
- Software licensing (including upcoming renewal or upgrade)
- Server hardware (amortized over 5 years)
- IT labor - patching, updates, troubleshooting, backups
- Infrastructure overhead - power, cooling, rack space, UPS
- Disaster recovery for this application specifically
SaaS total cost includes:
- Per-seat subscription × number of users × 36 months
- Implementation and data migration (often 20-40% of Year 1 cost)
- Training and change management
- Integration development (connecting to your other systems)
- Egress fees if you're pulling significant data out of the platform
- Annual price escalation (SaaS vendors typically increase 5-10% per year)
Common mistake: Organizations calculate SaaS cost as "seats × monthly price" and compare it to "current software license cost." That ignores migration costs, integration work, and the IT overhead you currently absorb without tracking it. The real comparison is often much closer than it first appears.
Step 4: Evaluate Fit - Not Just Features
A SaaS product might have 90% of the features your on-prem system has. The question is whether that 10% gap matters for your business. Key fit questions:
- Customization: Does your current system have custom workflows or configurations that a SaaS product won't support?
- Integration: How does it connect to your ERP, CRM, or other core systems? Native integration, API, or middleware?
- Data portability: If you leave, can you get your data out in a usable format?
- Compliance: Does the vendor provide a Business Associate Agreement (if you're in healthcare)? SOC 2 Type II attestation? Data residency options?
- Vendor stability: Is this company likely to exist in five years? Have they been acquired recently?
Step 5: Pilot Before You Commit
Most SaaS vendors offer free trials or proof-of-concept environments. Use them with real users doing real work - not an IT demonstration with fake data. Run a 30-day pilot with a subset of your team before signing a multi-year contract. The issues that surface in a real pilot are almost always different from the ones you anticipated in the evaluation.
When SaaS Wins
- Your on-premises system is approaching end-of-life and the upgrade path is painful or expensive
- The SaaS alternative is a clear category leader and the migration path is well-documented
- Your user base is distributed and performance over VPN is a pain point
- The SaaS product's release velocity (new features) is meaningfully better than on-prem
When On-Premises Wins
- Compliance requirements restrict where your data can live
- Your on-prem system is deeply customized and SaaS alternatives can't replicate that
- The 3-year TCO clearly favors on-prem (common for large user bases or data-heavy applications)
- Connectivity reliability is a constraint - SaaS requires internet access; on-prem doesn't
SummitCore conducts application portfolio assessments as part of our professional services engagements - mapping your current software landscape, identifying SaaS alternatives, and building the business case for or against migration. Contact us if you want an objective review.