Depreciating Assets: New Cars And On-Premise Solutions

Depreciating Assets: New Cars And On-Premise Solutions

Depreciating Assets: New Cars And On-Premise Solutions

“Everything must go!” Is a popular slogan from car dealerships. The reason, as we all know, is to make way for the latest models, the newest colors, and the latest automobile technology.

Occasionally because of this, a salesperson will offer a steep discount and someone will buy. In no time at all two things will happen: 1) Immediately their car depreciates in value 2) They now own old technology. The newest technology will always be just beyond their fingertips.

But it is what it is, and the new owner will feel pride in their latest acquisition and may choose to customize their car a little. Perhaps nice rims, perhaps an upgraded sound system, perhaps a vanity license plate.

Car owners know general maintenance is a necessary evil, including insurance and costly fuel.  Everyone is familiar with the costs and compromises associated with buying a car, and everyone is familiar with the concept of a depreciating asset.  Buying a car certainly has it’s ROI as a car empowers you and creates substantial benefits and efficiencies. But here’s the kicker: if you buy a new 2017 sedan it will still be a 2017 sedan in 2020, and the same applies to on-premise software and solutions. On-premise is and will forever be a depreciating asset.

On-premise will never be what it’s not: 

Continuing with the car analogy, if the car owner wants more features and functions, it will likely be either very expensive or rather impossible (within the realm of reason). Aftermarket parts could be added to enhance and power up the vehicle, but it’s core is still an aging technology.  And  consider the body: if it’s capacity is for five passengers, it will never be able to safely hold even one more. Consider adding more capacity like a luggage rack or a trailer, but it will affect performance, particularly if this vehicle wasn’t meant to haul.

On-premise solutions, much like a car, can only do what it was originally created to do, and can’t have major upgrades without major labor and cost involved. It is what it is, no matter what changes may happen with your business or the industry.

The curse of customization:

With both a car and on-premise OMS, if you customize, you say goodbye to easy updates. If a rim is stolen, you can’t just buy any old rim, you have to, again, get it customized.

Of course, once it’s time to get a new car, if you want those features again, customization is inevitable, and you are once again paying a big chunk of cash for the core product and then all new customizations.

The same goes with on-premise order management. Any time an on-premise solution gets tricked out, upgrades, updates, or simple changes become exponentially harder and more expensive.

SaaS in the Cloud will always be what it needs to be: 

It’s against conventional wisdom to buy a 12 passenger van when you are a family of three with only future plans to become a family of 12. By the time your needs change you will want the latest model. The same goes with on-premise, you won’t buy more than you think you will need in the next few years. But, what if your plans change? What if you have a delightful uptick in traffic? Will the onslaught of customers break your platform, or will it easily scale to fit your needs?

Ideally, cars would transform over time, so that you could get a car that was updated with the latest technology inherently, i.e. your 2017 model sedan was a 2020 model three years from now without having to pay for a whole new vehicle, with the option to gain more or fewer seats if necessary.  Ideally, maintenance on cars would just happen as part of your purchase price.

Seem like a dream?  Well, when it comes to cars, it is. But when it comes to enterprise software, this is a reality. Software is moving to the Cloud, and multi-tenant SaaS solves every pain point we mentioned above.

Benefits of multi-tenant SaaS in the Cloud:

  • Always running the most current version
  • Easily scale up or down based on your businesses needs without compromising performance
  • Automatic updates
  • Inherent maintenance
  • Faster speed to market
  • Easy usability
  • Lower total cost of ownership

For more benefits of the Cloud vs on-premise solutions, read more here.

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