Is software as a service (SaaS) only less expensive than on-premise software during its first two years in operation? One observer notes that SaaS applications will have lower total cost of ownership (TCO) for the first two years because SaaS applications do not require large capital investment for licenses or support infrastructure. But after three years, an on-premise deployment can actually be less expensive from an accounting perspective, because companies can write down hardware depreciation costs associated with the deployment on their balance sheets.
Maybe. But just how much do companies care about this five-year TCO question right now, due to the recession. The "bunker mentality" might be so pervasive and powerful in companies today that they're willing to take the two-year TCO savings and worry about the five-year TCO if they still have a job at that point.
Source: CIO