Deltek First - The Business Case

Deltek First -

The Business Case

Executive Summary

Many organizations that do business with the government are adopting cloud-based versions of specialized business solutions with the aim of focusing limited IT resources on core business requirements and of using operational rather than up-front capital budgets. However, some organizations shy away from cloud implementations due to the belief that these solutions have a higher overall total cost of ownership (TCO). Yet these concerns are based just on incomplete information—often customers compare the cost of hardware and software for an on-premise solution with the subscription cost of a cloud solution.

This white paper provides a comprehensive look at the TCO for both cloud and on-premise versions of specialized business solutions. This analysis finds that organizations using cloud-based implementations not only benefit from a higher quality solution, less risk, and faster time to value—they achieve these advantages at the same or lower total cost than an on-premise solution.

Despite Benefits, Some SMBs Hesitate to Adopt Cloud Computing

Small to mid-sized (SMB) organizations that serve the government recognize that specialized business solutions from Deltek help them win more business, increase visibility into their projects, improve cash flow and comply with DCAA regulatory requirements.

Many organizations are adopting cloud-based versions of these solutions, such as Deltek First, as alternatives to traditional on-premise solution deployment and maintenance. Benefits of these cloud-based solutions include the ability to focus limited IT resources on core business value, rather than on managing a complex IT infrastructure. In addition, organizations can use operational budgets rather than incurring significant up-front capital costs because cloud-computing eliminates the need to buy, deploy and manage IT infrastructure and solutions. Vendors take responsibility for everything: servers, storage, operating systems, databases, business software, updates, migration, power and cooling, data center space and support services. Customers simply pay an ongoing subscription fee.

Despite the substantial benefits,

“When we learned

that Deltek now

provided a SaaS

offering, Guident

jumped on the

opportunity to

partner.”

Deltek First: Higher Quality, Less Risk, Faster Time to Value and a Lower TCO

The real problem is not that cloud-based solutions are more expensive than on-premise solutions, rather that potential customers do not take into consideration the full costs involved in implementing an on-premise solution. SMB organizations need to make a comprehensive accounting of the costs of an on-premise solution versus a subscription-based cloud solution to make a true apples-to-apples comparison. The following analysis will demonstrate that the economies of scale inherent in a cloud solution mean that cloud vendors can deliver a higher quality infrastructure with less risk and a shorter time to value—all at a cost that is comparable or even lower than an on-premise solution. Higher Quality

Cloud computing vendors, such as Deltek, support their customers on a shared

infrastructure, rather than as separate, individual environments for each customer. By optimizing solutions for this shared environment, cloud vendors can achieve efficiencies throughout the solution lifecycle that would be difficult for organizations implementing an on-premise solution to achieve and can deliver a higher-quality solution than organizations can typically implement on premise. In particular, cloud vendors deliver:

Up-to-date and optimized systems

Organizations with on-premise solutions may let upgrades slide or skip them altogether because they don’t have the resources to keep up with them. Cloud based systems take advantage of the most up-to-date hardware and software. A fully optimized infrastructure means that the solution will provide better performance compared to an on-premise solution that has not been optimized.

At the same time, customers always have access to the latest versions of the software—while customer-specific configurations are maintained. Latest security

Deltek First cloud solutions deliver a highly secure data center with the most sophisticated physical, technical and operational security available. Customers benefit from 24/7 monitoring with complete physical security, UPS and diesel backups, colocation and redundant data carriers on the DHS critical infrastructure. Personnel undergo rigorous security training and are covered under strict confidentiality agreements. Responsibilities and segregation of duties are formally documented and evaluated regularly. Data is secure as well since systems are protected by the most complete and current malware and anti-virus security.

Ongoing Monitoring

A dedicated cloud operations team constantly monitors availability and application health so they can proactively prevent any emerging problems from impacting customers. Availability and disaster recovery

“Deltek First

[GovCon] Essentials

really combined the

best of both worlds

when it came to

selecting a powerful

ERP: It provided

the tools for us to

optimize our critical

accounting and

back-office practices,

without incurring

heavy costs or

upkeep from our own

IT department.”

» Barry Nelson, CFO at Nelson Engineering Co

Scalability

On-premise scalability might require

organizations to over purchase hardware and other infrastructure capabilities in anticipation of increased demand—which adds to their CapEx costs. Deltek’s hardware, software, networking and storage technologies are refreshed, updated and expanded to provide maximum scalability and speed. When customers need to scale their systems, they can simply add users without having to purchase more powerful hardware and supporting infrastructures.

Less Risk

With on-premise solutions, organizations must manage numerous risks internally, often with limited resources. These risks include:

• Application availability risks--If only one person within a firm understands how to manage a particular application and that person goes on vacation or leaves the firm, the organization that needs the application available at all times faces significant risk.

• Security risks--Sensitive data may not be encrypted while hardware and software assets may not be secure, leaving valuable information vulnerable to intrusion or theft. Hardware storing sensitive company data may have USB ports that provide a simple way for someone to leave the building with sensitive company data. Companies may not have the staff to stay abreast of all operating system security updates or keep firewall and malware software current (if deployed at all). Staff may not be trained in the latest security practices or threats.

• Business continuity risks--A natural disaster, such as a flood, earthquake or fire, can damage hardware and bring operational processes to a standstill.

• Compliance risks--Complying with state laws such as MA 201 can be challenging for smaller firms while the inability to stay current with the latest releases can mean outdated regulatory, compliance, or security features.

disaster recovery into our solution. Our staff is available 24X7X365 to cover our customers IT maintenance and support requirements. They are continuously trained in the most current security procedures. Because we take care of these details, customers minimize the risk inherent in supporting and securing an ERP offering. Faster time to benefit

Even the easiest to install and configure on-premise solutions take weeks or months to deploy. Organizations can be up and running on a Deltek First cloud implementation in a matter of days. As a result, cloud based solutions deliver a faster time to benefit, which improves overall return on investment.

Same or Lower TCO

When looking at costs, many customers compare the full subscription cost of a cloud solution with only the hardware and software costs required for an on-premise solution. Based on this analysis, they may conclude that the cost of the cloud solution over a five year period is higher. Yet their cost estimates often fail to include the entire cost of purchasing and maintaining an on-premise solution. The full costs of such a solution include the following:

Hardware and Software acquisition When organizations implement an on-premise solution, they must purchase the necessary hardware and software, incurring one-time capital costs for:

• Server hardware

• Operating system software—depending on the server hardware purchased, the operating system may or may not be included.

• Firewalls

• Database software license

“You’re not only

buying Deltek,

the product. You’re

buying the people

behind the product,

the support, the sales

people, the technical

support… You’re

buying not only all

that. You’re buying the

processes that they

built Deltek around.

And these processes

are world class

financial processes.

You’ll see an immense

change in your

organization once you

implement this.”

» Dan Ackerman, Executive VP, Guident

With Deltek First, these costs are all included in the price of the subscription.

Installation and configuration

With an on-premise solution, an organization incurs labor costs for design and

implementation—costs that are rolled into the subscription cost of a cloud solution. These costs for on-premise solutions include:

• Detailed design—Design costs include the time and labor cost (of either staff or consultants) to define project objectives and scope; detail existing processes; identify process gaps and data sources; document business requirements; and develop the final project plan.

• Configuration and deployment—Configuration and deployment costs encompass all the time and cost associated with deploying the hardware and software, including installing the hardware, operating system, database and software; configuring backup software; and configuring the application software. Ongoing maintenance and system management

Organizations with on-premise solutions must also maintain and manage their systems over the long term—tasks that are once again incorporated into a cloud subscription fee. Ongoing costs include: • Server maintenance and upgrades—IT staff

must perform routine hardware maintenance. In addition, as the number of users and amount of data grows over time, companies need to buy additional server hardware to accommodate them.

• Software maintenance-- organizations pay ongoing annual maintenance fees for database, application, and backup software. In addition, most backup software vendors charge for licenses based on capacity. Since most industry analysts have found that data volumes for organizations tend to grow by 20 to 40 percent

year over year, annual increases in backup software license fees average 30 percent annually. Ongoing maintenance fees for backup software also increase with additional capacity. • Patch and upgrade database, application,

and backup software—IT will need to install patches as they become available. Additionally, upgrading to the latest version requires organizations to install and configure the upgraded software.

• Maintain, patch and upgrade security hardware and software—Security solutions include firewalls , intrusion detection/ prevention software (IDS/IPS) as well as software that protects against mal ware and viruses. Like other software, security software requires ongoing maintenance fees, the time and cost of patches and of purchasing and installing upgrades. • Business application support—organizations

need IT staff to support business applications. • Disaster recovery planning—IT organizations

must develop processes, policies and procedures to prepare for recovery after a natural or human-induced disaster. TCO Example

Manage

Everything Yourself Deltek First CloudSubscribe to

Required Activities/Costs Timing Cost Timing Cost

Buy servers (assuming 3 weeks

standard server) $15,000

Buy firewalls 3 weeks $1,000

Buy database software 1 week $7,700

Buy operating system software (or preinstalled 1 week

on server) $2,400

Buy VPNs, and other secure access capabilities 1 week $1,000

Buy mal-ware and monitoring software 1 day $2,500

Buy business application software 1 week $50,000

Buy annual maintenance 1 day $9,000

Install and configure servers 1 week $1,250

Install and configure database software 1 day $250

Install and configure operating system software 1 day $250

Install and configure firewalls, mal-ware and monitoring

software 3 days $750

One Simple Subscription Price N/A $40,000

Total Time to Begin Implementing 6 weeks 2 days

Sub-Total Initial Cost $91,100 $40,000

Manage backups 2 hrs/ week $4,875

Maintain and upgrade hardware 5 hrs/qtr $4,175

Maintain, patch and upgrade database software 5 hrs/month $4,465

Maintain, patch and upgrade operating system software 2 hrs/month $1,650

Manage VPNs, and other secure access capabilities 5 hrs/month $3,125

Maintain, patch and upgrade mal-ware and monitoring

software 5 hrs/month $3,425

Maintain, patch and upgrade business application software 5 hrs/month $2,925

Purchase business application support and maintenance 1 day $9,000

Disaster recovery planning $6,728

One Simple Subscription Price N/A $40,000

Sub-Total Annual Ongoing Cost $40,368 $40,000

Conclusion

Worldwide Locations: Belgium +32 (0) 2 709 2191 Denmark +45 35 27 79 00 Germany Frankfurt am Main +49 6967733106 The Netherlands +31 (0)20 347 3080 Norway +47 22 01 38 00 Sweden +46 (0)8 587 077 00 United Kingdom London +44 (0)20 7518 5010 deltek.com [email protected]