As part three of our series about the importance of SaaS solutions for electric utilities, we follow up on our previous blogs about time savings and integration by looking at the budgetary benefits of how cloud-based data collection tools optimize resources.
Cost of Creation
Estimates for creating a custom in-house software platform range from $75,000 to $250,0001 and more (way, way more), creating a heavy financial burden for any company looking to go this route. And considering that in-house takes 4 to 12 months or more to launch,2 you’re going to be waiting for a long time after you’ve already paid on the platform before you’re able to use it.
Most SaaS platforms allow near-instant gratification once you’ve signed up and paid for a subscription fee (or, in the case of Fulcrum, signed up for a 30-day free trial!). Designed to welcome users to easily sign up and get started, SaaS data collection tools lessen, or most likely eliminates, the wait between payment and use.
The costs associated with premise-based, bespoke software solutions don’t end at implementation. There are bugs to address, technology advances requiring platform modification, as well as regulatory changes that mandate platform updates, such as GDPR compliance in Europe or CCPA compliance in California. To get a true understanding of the cost of custom-created software, you must think of the initial investment simply as a down payment, with significant ongoing spending as the platform continues to evolve.
And all this evolution doesn’t come cheap. A 2017 study3 found that the annual cost of software maintenance ranges from 13 to 28 percent of its initial startup costs – and note the word here is “maintenance.” We’re not talking upgrades – just keeping the platform up and running. In addition, even though you spend money to maintain the platform, there is no guarantee that it will work the way you want it to, or even at all.
With a SaaS platform, while you are on the hook for your monthly or annual subscription fee, it will be significantly less than in-house maintenance costs. In addition, this fee comes with SLA guarantees for uptime, availability, and data protection – critical considerations when you’re dealing with true life-or-death situations, such as the urgency of restoring power after a storm.
While companies using in-house platforms can expect to pay something around 13 to 28 percent annually for maintenance costs, that’s only a guess. It could be less, or much, much more. It’s difficult for any company to meaningfully budget for a software platform that is both critical to the company’s operation and has no top limit for required costs. In addition, as a major investment, in-house platforms fall under the capital expenses bucket, showing up on company balance sheets, and must be depreciated to achieve any cost offset.
Having a set monthly payment eliminates budgeting second-guessing. Instead of having to keep a large sum in reserves to pay for any above-and-beyond software expenses – or face the possibility of having to shift assets around or borrow in the case of a truly catastrophic platform failure – you know exactly what you need to pay each month. Finally, with the cost of the software platform contained within the subscription model, electric utilities can add data collection tools monthly fees to operating expenses, avoiding the hassle of depreciation and allowing for a more straightforward tax deduction.
SaaS data collection tools are a budget-friendly game-changer for electric utilities. Unlike custom in-house software, they offer instant access and predictable subscription fees, saving utilities from hefty upfront and ongoing costs. Moreover, with fixed monthly payments, utilities can plan their budgets more effectively and even enjoy tax benefits with the subscription expenses categorized as tax-deductible operating costs. Embracing SaaS data collection tools enables companies to optimize their financial resources while enjoying seamless and cost-effective data collection capabilities – a true win-win for any electric utility!
Check back soon to learn more about why SaaS data collection tools like Fulcrum can help supercharge electric utilities operations for better efficiency, effectiveness, and cost savings.
While you’re waiting, sign up to learn more about the Fulcrum platform with a no-obligation chat with one of our Fulcrum experts.
And finally, if you missed the first installations in our SaaS is Best for Electric Utilities series, you can start here to check it out!