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3 Steps for Selecting Apps for SaaS Migration

Determine the ROI of migrating applications to SaaS, as determined in a case study of a K-12 school district.

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Many organizations are moving their legacy workloads to the cloud. Some are even evaluating vendor operated software-as-a-service (SaaS) cloud offerings to entirely replace their on-premise legacy infrastructures.

This article outlines a recent study conducted by the IBM IT Economics (ITE) practice, which compared the cost and business value impacts of a clients’ on-premise infrastructure with their respective off-premise SaaS counterparts.

Three Steps in Selecting a Candidate Application for SaaS

We can broadly define the major steps for evaluating a set of applications for SaaS as follows:

  1. Select one or more candidate applications from an overall application portfolio using an attribute “heat-mapping” process
  2. Define the key cost factors to be used for comparing on-premise versus off-premise SaaS cloud hosting options
  3. Build an overall cost model for all options and weigh these against the business values of each

To better illustrate these steps, we will use the outputs of a recent ITE practice study to describe the more salient points of the overall selection methodology

The study described here involves a large K-12 school district in the U.S. responsible for the development and education of over 150,000 students. A vast category of applications is used to support this effort, including curriculum development, classroom aids, library management, student transportation, school nutrition, web-to-print, email and calendaring, e-conferencing and many others. In all, this client is using over 300 different named applications from over 100 vendors.

The first step in conducting a useful and timely analysis was to narrow this broad portfolio of applications to a smaller subset of most likely candidates for off-premise SaaS hosting. The method used to do this requires client and IBM consultant co-participation in the creation of an application attribute heat map.

Step 1: Create a Heat Map

Through a series of collaborative conversations between the client and ITE consultants, a short list of about a dozen applications was selected for further evaluation. During this step, it’s important to get inputs from a variety of client perspectives. This includes IT support personnel, procurement, administrators, management and most importantly, end users.  

Using a consensus method, the evaluation team choose six major attributes to apply to these
applications and applied a weighted rating for each. These rated attributes were then used to construct a visual heat map to better compare the relative merits of moving each application to a SaaS-based solution.

The attributes used in this heat map included the following:

  • Usage profile: High-level characterization of the utilization levels of this application
  • SaaS complexity: The level of implementation complexity of the available SaaS solution
  • Data requirements: The level of data complexity, integration, volume, etc. (e.g., ACID properties)
  • Availability requirements: The level of importance of the application and its availability
  • Perceived cost: An initial impression of the potential costs of moving to SaaS
  • Perceived benefits: An initial impression of the potential benefits of moving to SaaS

Figure 1, was then used to rank each application for migration to SaaS and narrow the selection for further study down to the top five.

The five applications selected for further analysis included library management, web-to-print, student transportation, school nutrition and email.


Step 2: Define theKey Cost Factors 

After narrowing down the application mix to the top five candidates for further cost analysis, the next step was to identify the key factors in comparing on-premise cost of operation with each SaaS solution’s cost of implementation and support.

Each application had its own set of unique sizing and costing elements. These elements typically dictated how the respective vendors sized and charged for their software and services for both on-premise and off-premise licensing and support.

Library Management 

Licensing and support costs for this client are based on “per site” use. The vendor charges a small transition fee to convert their clients from on-prem to SaaS. Current on-prem annual support costs are $160,950. 


Licensing and support cost based on “per user” and mailbox size. Dual entitlement allows for a mix of on-prem and off-prem SaaS users. Current cost is $15.59 per user and SaaS user cost is $29.40 per user, representing a 3% annual increase.


Licensing and support costs are based on the number of users and job type and volume. Current on-premise annual support costs are $10,000 per year. A recent SaaS quote was $19,000 for activation, $22,700 for an annual subscription and $9,000 one-time services.


Licensing and support costs are based on the estimated number of vehicles, transport square miles and transported users. Current on-prem annual costs are $5,165. A recent SaaS quote was $22,450 for the first year and $19,650 per year thereafter.


Licensing and support costs are based on the estimated number of users and sites in use. The current estimated annual application subscription cost is $100,000, whereas the estimated SaaS cost is $150,000 per year.

Of course, in addition to vendor software cost considerations, the analysis team had to consider other cost factors as well, including any associated hardware acquisition and maintenance costs, system software, labor (both migration and ongoing support), power, cooling, space and disaster recovery (if required).

Step 3: Build a Cost Model 

By using the baseline inputs to create a total cost of operation analysis, the team was able to accurately compare a five-year view of the cost of continuing to run each of the five applications on-premise versus migrating to a SaaS solution.

A summarized view of the cost differences for all five applications shows that every application except email exhibits a positive case for migrating to SaaS (see Figure 2). In the case of email, many of the associated costs can be attributed to the high cost of migrating any current vendor database or team rooms to an alternative vendor’s email product.

Of course, cost alone is not enough to make a decision. Business and flexibility advantages to running off-prem SaaS, and advantages for keeping all applications on-prem must be considered. Understanding and weighing these against the costs is an important exercise in making a final decision (see Figure 3). 


Analysis Leads to an Informed Decision 

Based on the overall analysis, the client was able to make the following informed observations:

  • It makes good business sense to pursue transition to off-prem SaaS solutions (or a hybrid implementation in the case of email) for all of the candidate applications examined
  • A transition or refresh cost was included where appropriate, but a deeper review of the possible migration requirements or risks is recommended
  • This analysis didn’t include a thorough review of the timeline or possible duration involved in transitioning from on-prem to SaaS and should be considered in the decision process

Since the completion of this study, the client has embarked on several projects to actively move its library management and school nutrition systems from an on-premise infrastructure to a vendor-supplied SaaS solution.

In addition, although the client has made decisions to continue to support email, web-to-print, and transportation functions internally and on-premise, they’re also considering an eventual hybrid cloud mix of on-premise and SaaS cloud down the road as a way of providing greater flexibility and capabilities for end-users. 

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