If I had five bucks for every time someone talked about ‘the Cloud’ in conjunction with intranet software, I would surely be able to fly our team off to Brazil to watch the World Cup finals!
Investing in a cloud-based, SaaS (Software as a Service) model, for corporate enterprise intranets is a hot trend that continues to build momentum in the market.
Having said that, interestingly, when we talk to our Intranet Connections customers about making the move to ‘the Cloud’, the answer is – No, they will not. Perhaps many of them are not interested in moving their on-premise intranet to a cloud-based intranet because a large majority of our Intranet Connections’ family of customers are in healthcare, financial and the public sector. Or perhaps, they have considered the myriad of factors that must be looked after when moving to ‘the Cloud’.
Why a Cloud Based Intranet?
Why the demand for ‘the Cloud’?
- Is it an Accounting Decision – a monthly operating expense over a capital cost investment?
- Is it an IT Resource Constraint – a matter of hands-off server maintenance and management?
- Is it a Corporate Trend – a decision to move with ‘everyone else’ to the ‘future’ of software?
Moving to a cloud-based intranet for any enterprise software needs careful consideration. We are not talking about a simple free service account, such as YouTube, Google Docs or Survey Monkey or a multitude of other channels that offer features for singular business use.
An Intranet is Enterprise Software
Enterprise software is all-encompassing, housing your confidential information, your employee information, your “trade secrets”/intellectual property, your company financials, your corporate goals and even your customer information. This includes patient information, in the case of healthcare or member information, in the case of banks and credit unions.
At this point, you may be asking yourself am I comfortable having all this incredibly sensitive information online, outside of my immediate control?
Cloud-Based Intranet Factors
Making the decision to go with a cloud-based intranet requires you to consider a few more factors…
1) Low Cost Now = High Cost Later
A SaaS or cloud-based model work as a rental agreement. Advertised as: “Only $8 per user (employee)/per month! Cancel anytime!”
The problem is that for an intranet, once you add your internal documents, your policies and procedural checklists, your employee forms, your vendor and client contacts, and the other multitude of corporate data and resources … are you likely to cancel anytime? If you do, you risk losing your data.
Unfortunately, you don’t actually own your software with a cloud-based intranet model, unlike a traditional on-premise intranet where you pay a one-time fee to keep your data and software in-house, under your control.
The truth is that most companies end up on an intranet platform for a minimum of seven years. Let’s do the math. Assuming you are small-to-medium sized business (SMB) with 225 employees, if you were to move to a cloud-based intranet for approximately seven years here is the actual cost:
$8 per month X 225 employees = $1,800 per month X 12 months = $21,600 X 7 years = $151,200
That is $150,000 without considering any extras/add-ons that often come along with cloud-based intranets, including: implementation fees, design/architecture consulting packages, training/support packages, etc. A quick run of the numbers show you that while it may not show up as a capital expense on your balance sheet, the long-term cost of a cloud-based intranet could definitely be considered as such.
2) Scalability is Expensive
Can a cloud-based (SaaS) intranet grow with your business? Absolutely, but it will cost you. Since cloud-based intranets charge on a per user/per employee basis, this means if you envision growth over the average seven years in having your intranet the cost for utilizing your intranet will increase. The example above assumed your number of employees stayed constant, 0% growth rate.
But let’s be realistic and assume your number of employees grows at a rate of 5% year-over-year over the next seven years, you are looking at an increase in the cost of your intranet of: $1,056 (Year 1), $2,208 (Year 2),…$8,832 (Year 7).
Again, the costs keep piling up each year you’re on a cloud-based intranet, whereas an on-premise model it is a one-time fee and your intranet solution grows with you, no added costs.
3) Cloud-Based Intranet Risks are High
There is no doubt, it is enticing to think of washing your hands of server farms and all the hardware overhead your IT Department maintains for the organizational software requirements. However, you do so at the risk of not only confidential data living out in the cloud, but if your SaaS provider is compromised you could lose days of access to your corporate enterprise intranet.
With DDOS attacks and confidental data hacking on the rise, these cloud-based servers are feeling less and less secure to many of our financial, healthcare and corporate customers every day.
4) Loss of Control
Most affordable SaaS/cloud-based intranet models operate as a “multi-tenant” solution, which essentially means one code base to multiple customer databases (where the data is kept). For the intranet software provider this is ideal. It means when bugs are reported you only have to fix in one file, only in one spot and it automatically is fixed for all customers.
The downside to you as the customer? Loss of control. Your intranet will be upgraded at the schedule set by your intranet software vendor. You have no control over when and what is changed. This potentially means features/functionality of your intranet software change without you knowing about it and without any control over what is changed.
Alternatively, an on-premise intranet provides you the control to update or upgrade on your terms. You get to decide when and what to change. You have no control over testing new releases before going live to your employees to ensure the upgrades to your intranet will be compatible and ready for your employees to use.
At Intranet Connections, we go overboard to ensure backward compatibility, particularly on design elements as we know your employees are NOT happy when things change on the intranet.
When changes are made by your intranet vendor and pushed to every client at the same time, as done in a SaaS “multi-tenant” model, you are a small fish in a big ocean, with no control over the disruptive waves.
Ready to Move to a Cloud-Based Intranet?
This post is not to say a cloud-based intranet isn’t right for you. The aim was to unveil the factors that must be considered when deciding on a cloud-based intranet. It is not a simple ‘yes’ or ‘no’ answer and it should not be determined based on initial start-up cost.
This acts as a simple reminder of all the questions you should be asking when considering ‘the Cloud’: Should I own my intranet software? Will a cloud-based intranet actually cost more? Am I comfortable with having my confidential data with a third-party, online?