SaaS vs On-Premise Energy Management Software

SaaS vs On-Premise Energy Management Software

If your job includes managing energy data, either for controlling power production or energy consumption, there’s 90% chance that you are struggling – or at least have struggled – with the integration and organization of your data. Doing that in a good or bad way since the beginning, can affect your business for many years. 


Asset managers, O&M companies or even energy suppliers have two choices: they can develop their own on-premise software, or they can rely on third party’s platforms, that typically work in a Saas (software as a service) manner. 

Both choices have their pro and cons, it really depends on what are your business needs and goals for the long run.


However, in a phase in which it’s difficult to integrate new technologies and business models – like in the energy industry right now – we suggest that system reliability and integration are the key elements that allow companies to keep the pace of innovation and satisfy growing customers’ needs. In particular, we think that there are 5 main reasons why Saas solutions might be better than on-premise custom software:

1. Lower cost of entry

With SaaS, you pay for what you need, without having to buy hardware to host your new applications. Instead of provisioning internal resources to install the software, the vendor provides APIs and performs much of the work to get their software working for you. The time to a working solution can drop from months in the traditional model to weeks, days or hours with the SaaS model.

2. Reduced time to benefit/rapid prototyping

In the SaaS model, the software application is already installed and configured. Users can provision the server for the cloud and quickly have the application ready for use. This cuts the time to benefit and allows to immediatly benefit from it without long wait times or steep learning curves.

3. Scalability

A SaaS approach to energy management, where you can collect all your data, offers more capabilities and fewer headaches than having to control different energy management systems at the same time.

Plus, your energy needs are likely to shift over time and your SaaS software can adapt along with it. For example it allows software suppliers to provide their customers access to new tools that have been shaped by tens of thousands of users’ needs.

4. Costs

Another key difference between Cloud and on-premise solutions is how they are priced. While there are many exceptions to this rule, in general, Cloud software is priced under a monthly or annual subscription basis including costs for support and updates, with the only additional fees being training.

On-premise software is generally priced under a one-time perpetual license fee (usually based on the size of the organisation or the number of concurrent users). There are recurring fees for support, updates and training. But what many companies forget to consider is the Total Cost of Ownership (TCO) of their on-premise software investment, including hardware, network, backup and development systems.

5. The SaaS vendor is responsible for upgrades, uptime and security

Under the SaaS model, since the software is hosted by the vendor, they take on the responsibility for maintaining the software and upgrading it, ensuring that it is reliable and meeting agreed-upon service level agreements, and keeping the application and its data secure.

SaaS software is a solution growing in popularity in the energy sector and has become an increasingly viable business option in the last few years. Suppliers take care of them for you and roll out regular software updates, whilst offering you the highest levels of security.

These benefits are now available with cloud-based energy management tools and having everything in one place is the ultimate key to managing and running a successful business.

This is the one of a series of articles, where we take a look at how energy companies can boost their performances through digital energy. In this series we will discuss:

  • New revenue opportunities in the digital energy era
  • Main struggles with energy monitoring and management software
  • Vertical all in one solutions Vs. Building your own energy software

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Vertical all in one solutions Vs. Building your own energy software

The revolution of energy management has created the need for more powerful and advanced tools: more and more of our day-to-day lives are becoming automated, and today energy companies are working on doing the same. So you need to find the right software for managing your energy. But first you need to decide if you should subscribe to an all in one solution that comes ready-made or reach for a software house to create your own. There are obviously pros and cons to both options, but what’s the better deal?

Buying an all in one solution.

The first option is subscribing to digital services: a SaaS solution, like O&M or asset management’s platforms to monitor the performance of the plants.

When it comes to pros, first of all it’s almost guaranteed to be the less expensive option. Second, when you buy an already existing software, you’re able to use it immediately, cutting down the time you need to wait to improve your business. Also, when you subscribe to an all in one solution, that software is used by others too, so there is the benefit of it being paid for, tested and improved constantly, and most companies offer full support to help you get comfortably set up and running smoothly. All the updates, security and maintenance are taken care of for you.

But the biggest benefit of buying a software that’s already been made, is that you pay for experience: the endless revisions, bug fixes, product launches and relaunches that go into developing a software. You’re paying for the years of work the creator put into their own business. And, you also gain from other companies like yours’ feedbacks. Which may mean you end up with great features you never would have thought of.

Obviously there are risks too: while buying a platform that isn’t custom-made it won’t perfectly match your needs. Plus, you might end paying for features you don’t need and missing some that are crucial for your business.

 

Building your own energy management software 

The second option you have is paying a software house to develop your own platform.

The immediate pros for a custom system are obvious: it is tailor-made to fit your needs. Every detail is built with your specific workflow in mind and every feature is one you’re guaranteed to use. You get exactly what you want. No one else has a say in what changes are made to the software. You never lose the features you use, and all the data you get out of your software are relevant to your business. 

But what many don’t realize is how expensive a custom platform can be, or how long it takes to build. Energy companies are complex systems, so they require complex software to run, which can take months to build. Even once they’re built, they cost a fortune to maintain. Updates, security and bug fixes are all additional costs that need to be maintained.

And last, but certainly not least, once you have built your own software you are locked for the long term. Every time you need to add new features or change some functionalities, you need to go through the whole process again. This slows down the innovation process by a lot. In this era of big changes in the energy industry, keeping the pace of innovation is the key to effectively compete against both incumbents and start-up companies.

So, what’s better?

Today the goal of energy companies is to grow in the most efficient way possible. 

If you have the time, resources and patience for building your own energy management platform, it might be worth it, but so many companies don’t. At the end of the day, you have to decide what your business goals are: do you want to spend your time and energy building software or growing your business?

Custom software will increase your efficiency and fit your businesses, but it’s not efficient to implement. It costs more time and money than most businesses are willing to spend.

Although subscribing to an all in one solution might not be the perfect fit, it still offers an efficient solution that will help you grow your business, without spending months just to get started. They’re built with experience, and they were made to help you succeed.

In conclusion, the key is definitely in finding a balance between these two options, don’t you think?

This is the second of a series of articles, where we take a look at how energy companies can boost their performances through digital energy. In this series we will discuss:

Subscribe to our Newsletter "Digital Energy Insights"