On-premises solutions require ongoing infrastructure investments, maintenance, and dedicated IT staff to manage. While you pay for a license once, you're also on the hook for everything from security patches to hardware replacements. With SaaS, those responsibilities shift to the provider, ensuring your system is always up-to-date, secure, and scalable without unexpected expenses. A deeper dive into the total cost of ownership (TCO) reveals that SaaS is financially competitive and the more strategic choice for businesses looking to streamline operations and reduce IT overhead.

On-Prem: More Than Just Licensing Fees

At first, a one-time software licensing fee for an on-premises solution may seem appealing. But that’s just the tip of the iceberg. Running an on-prem ITSM system can involve significant additional expenses beyond the initial purchase.

Pros of on-prem ITSM:

  • Full control: Companies retain complete control over their infrastructure, security, and customization options.
  • One-time licensing fee: Unlike SaaS, you pay for the software once rather than an ongoing subscription.
  • May be required for compliance: Some industries with strict regulations choose on-premises security and data control solutions.

Cons of on-prem ITSM:

  • High upfront and ongoing costs: Beyond software licensing, businesses must invest in hardware, infrastructure, and dedicated IT staff.
  • Resource-intensive maintenance: Keeping the system updated, patched, and secure requires significant time and labor.
  • Scalability challenges: Expanding the system often involves purchasing additional hardware and software, which can be expensive and slow.

1. Example of upfront costs:

2. Example of ongoing costs (annual):

  • Maintenance and support: $1,500
  • IT staff resources: $20,000
  • Energy and cooling: $3,000
  • Hardware upgrades (every 3 years): $3,000
  • Total annual costs (Years 1-3): $24,500/year
  • Total annual costs (Year 4, including upgrades): $27,500/year
  • Total annual costs (Year 5): $24,500/year

3. Total 5-year cost:

  • Upfront + Ongoing: $140,700

SaaS: Predictable, Scalable, and Cost-Effective

Unlike on-prem solutions, SaaS eliminates costly infrastructure investments and maintenance requirements. Everything is hosted, updated, and secured in the cloud, reducing IT overhead and expense unpredictability. But SaaS isn't just about cost savings—it’s about transforming how IT teams operate.

Pros of SaaS ITSM solutions:

  • Lower initial costs: No need for expensive hardware or dedicated IT staff.
  • Automatic updates and security management: SaaS providers seamlessly handle patches, compliance, and security updates, reducing the risk of vulnerabilities and downtime.
  • Scalability and flexibility: Add or remove users easily without worrying about hardware limitations or lengthy procurement processes.
  • Faster deployment: Get up and running in days or weeks instead of months, allowing IT teams to focus on strategic initiatives rather than infrastructure management.
  • Built-in redundancy and disaster recovery: SaaS solutions provide cloud backups and failover capabilities, ensuring business continuity without additional investment.
  • Accessible anywhere: Users can access the service desk from any location with an internet connection—no need for complex configurations, proxies, or firewall adjustments. This accessibility reduces training requirements and improves overall user experience.

Cons of SaaS ITSM solutions:

  • Ongoing subscription costs: Businesses must factor in recurring payments while there’s no hefty upfront fee.
  • Less customization: Some organizations may find that SaaS solutions have fewer customization options than on-premises alternatives, although modern platforms offer robust configuration tools.
  • Dependent on internet connectivity: Since SaaS solutions are cloud-based, they require a reliable Internet connection for access. However, most providers offer high-availability architectures with 99.9%+ uptime.

1. Example of subscription costs (annual):

  • Per-user pricing (10 users at $99/user/month on the Premier Tier of SolarWinds Service Desk): $990/month
  • Total annual costs: $11,880/year

2. Total 5-year cost:

  • Subscription fees over five years: $59,400

Cost Comparison Summary

Solution 5-Year Total Cost
On-Prem $140,700
SaaS $59,400

Beyond the Numbers: What SaaS Saves You

While the financial difference is significant, the real value of SaaS goes beyond cost savings. Consider the following:

  • No maintenance hassles: With SaaS, security patches, updates, and maintenance happen automatically—there is no need for dedicated IT staff to manage the system.
  • Scalability and flexibility: Need to add or remove users? SaaS solutions allow you to scale up or down as needed without costly hardware upgrades.
  • Security and compliance: SaaS providers like SolarWinds handle security and uptime, giving you enterprise-grade protection, helping to align with compliance regulations, without additional overhead costs.
  • Faster deployment and innovation: SaaS solutions roll out new features and improvements regularly, helping ensure you always have access to the latest technology.
  • Better user experience: Cloud-based ITSM platforms are designed with modern usability in mind, leading to improved employee adoption and efficiency.

The Bottom Line

At first, on-prem ITSM solutions may seem like the more affordable option. Still, when you factor in hardware, maintenance, IT staffing, and hidden costs, they quickly become a financial burden. SaaS solutions like SolarWinds Service Desk offer a more predictable, low-cost alternative that can help save money, reduce complexity, improve security, and enhance scalability.

If you’re a Web Help Desk® customer who is considering moving to Service Desk, our Migration Center is here to guide you through every step. Explore how you can transition seamlessly to a cost-effective, modern ITSM solution today.

Estimated costs are in USD as of April 7, 2025.

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