Most technology companies spend vast amounts of time maintaining their software development infrastructure— time better spent building products. Subversion Hosting and Software as a Service (SaaS) providers allow clients to outsource non-core tasks to experts, who promise time and cost savings. While good in theory, how do you know that adopting a SaaS solution really will deliver?
Jason Rothbart of ReadWriteWeb recently wrote that installing and maintaining a site license of Sharepoint for a 100 person company would take four and a half years before becoming cheaper than an equivalent SaaS solution, by which time the licensed software would be obsolete.
We investigated how 241 technology companies (now SaaS customers) previously maintained open source version control and issue tracking tools in-house. Amazingly, the average surveyed technology company spent 3,000 hours or $160,000 in direct costs on Software Change Management (SCM) each year. Enterprises easily spend five or ten times that.
In contrast, SaaS solutions are specialized and feature-rich, are regularly backed up, sell for less than $1,000 per year, and allow customers to focus on more valuable activities.
The Cost of “Doing It Yourself”
To calculate the total cost of ownership (TCO) of maintaining in-house software change management (SCM) systems, in 2008 Codeison sent survey invitations to over 10,000 people. We received 241 completed responses, mostly from CEOs, CTOs or lead developers in small to medium sized technology businesses, and in Enterprises.
Two thirds of surveyed organizations said that they consider source control and issue management a mission-critical activity. Activities ranged from installing, upgrading, and supporting version control and issue tracking software, maintaining hardware and performing regular backups. Costs were categorized as:
Hardware. The 241 respondents spent an average of $3,500 per year(and up to $12,000) on hardware purchases or rental related to source control. A minority of customers piggybacked their version control repositories and bug tracking software onto multi-instance servers housing email, webservers, customer databases & project management tools.
Software Implementation. While the open source applications hosted by Codesion are free to download, their implementation is costly. Respondents spent on aveage 116 hours each month deploying SCM software, including:
- 69 hours per month installing and patching SCM applications
- 47 hours bug-fixing and troubleshooting SCM applications
Ongoing Maintenance & Support. Respondents spent on average 87 hours each month on in-house technical support, including installing plugins, configuring user permissions, or upgrading software. These activities were described as “not productive” or even “detrimental” for developers trying to focus on core product development.
Data Backup and Recovery. Performing regular, offsite backups of critical source code is essential. Not surprisingly, the average respondent took 45 hours each month backing up and recovering project data. Yet even the most disciplined admin can let backups slip through the cracks during busy times, not because they don’t value their own code, but because taking off-site redundant backups is a laborious and detail-oriented task.
Total Cost of Ownership
Before outsourcing to Codesion, respondents used to spend some 3,000 hours per year (250 hours per month) maintaining in-house source control and issue tracking systems. This usually involves a system administrator earning conservatively $90,000 per year ($52.17 per hour with overheads), costing $155,460 each year in labor time. With hardware costs, this adds up to $160,000 per year.
SaaS Economies of Scale
In comparison, by outsourcing to Codesion, customers identified the following key value drivers:
- More than 90% total cost savings, with low upfront costs due to monthly subscription or discounted annual payments
- Initial implementation costs are virtually nil – setting up a new account required simple configuration of projects and user access through web-based software and uploading existing project data to the Codesion system.
- Secure multi-site access and an easy way to share and collaborate on projects with clients and teammates outside of the corporate firewall
- Fully-maintained, always upgraded software: Codesion administrators carefully bug-check new software releases for potential incompatibilities before upgrading the software
- Improved redundancy & security: All Codesion projects are backed up every 10-minutes to multiple datacenters, ensuring that customer data is always secure and recoverable
What’s the Catch?
Security. The main concern of all prospective SaaS customers is for the security of their data. For this reason, Codesion employs redundant drives, servers and datacenters – all monitored by full-time dedicated staff and delivered to thousands of leading organizations, 24×7. Customers can opt to mirror project histories to on-premise servers. Interestingly, the #1 reason why our customers adopted Codesion was for “risk-management & data security” (21% of responders).
Control. By outsourcing to a third-party provider, you give up certain controls such as root-level access, the ability to reconfigure or move projects around at will or install your own plugins. Fortunately, by serving thousands of customer requests over time, Codeison has deeply modified and integrated our products and redesigned our interface so that we can accommodate 95% of customer needs.
Integration. As customers expand and utilize a range of in-house and hosted tools, it becomes more important to integrate them via a single service. While Codesion already allows you to integrate your Subversion commits with Trac or FogBugz tickets, 2009 will bring exciting new developments in this area.
Have you run the numbers yourself? Let us know what you found!