The differences between SaaS and on-premise software asset management: A guide

The differences between SaaS and on-premise software asset management: A guide
Prasanna Kulkarni is founder and product architect of Comparesoft. Comparesoft is an AI-driven asset management software recommender used by Invesco, PwC, Barclays and thousands of other businesses.

Software asset management (SAM) plays an integral role in today’s businesses. It helps with cost optimisation, operational efficiency, and risk mitigation. Most companies implement SAM to deal with the complexity of on-premise asset management. As companies started to move towards software as a service (SaaS), IT managers hoped for easier software license compliance and simplified processes.

For a while, there were talks of SAM elimination. That didn't happen. Instead, SaaS has brought its own set of challenges that require more SAM involvement. IT managers need to understand the differences between on-premise and SaaS systems, so they can better manage asset lifecycles in both environments. And SAM systems have to evolve to address SaaS issues.

The role of software asset management in traditional on-premise environments

Software asset management helps companies manage the lifecycle of their software assets. It keeps track of planning, requisition, deployment, maintenance, and retirement of software. It ensures compliance with the company’s license agreements. SAM involves people, processes, and technology. It deploys tools to automate tasks. It dictates the governing policies for various software assets. An effective SAM requires cooperation across all departments in an organisation.

Here are some of the benefits of having an effective SAM:

  • Cost savings – SAM reduces cost through automating processes, eliminates under-used licenses, and removes software asset management overheads.
  • Better security – Better tracking of software downloads and purchases eliminate security threats from viruses and malware.
  • Reduced non-compliance risks – Ensures license compliance across the organisation. It reduces the risk of financial and legal repercussions of noncompliance.
  • Better vendor support – It’s easier to get full support from vendors on registered software.
  • Reputation management – When working with business partners, noncompliance can indicate sloppiness. It can damage your reputation with your partners. SAM helps you stay ahead of any possible problems.
  • Improved productivity – An effective SAM means better access to manuals, documentation and product support. It leads to better productivity in the organisation.

The International Organisation for Standardisation (ISO) has defined SAM processes in the ISO/IEC 19770-1:2012 standard. It takes a tiered approach to SAM conformance.

Considerations for adopting SAM for SaaS – and the differences from on-premise

Traditional on-premise SAM provides solid support for an organisation. But moving the same system to SaaS requires some rethinking due to the differences in environments. Here are some of the key issues to consider:

New form of software assets: On-premise SAM manages the lifecycle of software assets. In a SaaS environment, the focus shifts to the software service. As service providers don’t have full SAM functionalities, and the organisation doesn’t own the infrastructure, the SAM becomes responsible for verifying the service provider’s compliance with service level agreements (SLAs). So SAM has to develop and implement the necessary tools and processes to support this new set of requirements.

Real-time processes: On-premise software assets move at a slower pace. So on-premise SAM systems are designed to support longer and slower lifecycle management. These systems in an agile cloud environment can cause bottlenecks. On the cloud, SaaS provides an environment for rapid change and better scalability. So SAM systems need to be upgraded to handle faster and nimbler SaaS processes.

Decentralisation issues: SaaS has a lower barrier to entry. Employees don’t need expert IT knowledge to implement the systems. They can just use a corporate credit card and purchase the service. It allows employees to bypass SAM procurement and approval requirements. Employees can purchase whatever they want. It might save time in the short-term but introduces a bunch of problems in the long-term. It can result in bad contracts, higher risk of noncompliance, data integrity issues, unnecessary business dependencies, higher costs and lack of financial visibility. The decentralisation removes checks and balances that keep on-premise assets safe. IT managers will have to rethink their SAM strategy to keep the process in check.

Evaluating total cost of ownership (TCO): SAM systems are important in determining TCO across the whole lifecycle of software assets. They depend on the understanding of software license agreements to figure out TCO for on-premise assets. But in the SaaS environment, the license models are more dynamic and the upgrade cycles are shorter. Also, the hidden costs of using services can be totally different than software assets. A SAM system needs to understand the intricacies of the subscription model, storage requirements, service renewal costs and other service-related hidden expenses to estimate the TCO for a service.

Bring your own device (BYOD) poses higher risk: Organisations allow employees to access corporate networks with BYOD to increase productivity. SaaS services make it easier to use BYODs. In an on-premise situation, companies had full control over the infrastructure. But in a SaaS-based cloud environment, there might be additional charges for mobile access. In extreme cases, the license terms might prohibit mobile access altogether. Also, the connectivity between a BYOD and the SaaS service is independent of the company’s infrastructure. It might open companies to additional security threats. Employees can also download licensed software for personal use while billing the company.

Regulatory and security compliance: SAM is crucial in any audit. Businesses have to ensure data privacy and security. Companies have to adhere to regulatory requirements like Sarbanes-Oxley (SOX), Health Insurance Portability and Accountability Act (HIPAA), Payment Card Industry Data Security Standard (PCI DSS), European Union Data Protection Directive, and more. It’s already difficult enough with on-premise devices. SaaS can make the whole process more complicated. SAM needs to have better governance policies to meet compliance requirements.


SAM is a great tool to optimise organisational efficiency. Even though the explosive growth of SaaS services may decrease the number of on-premise products, it’s probably never going to totally eliminate them. Also, a lot of countries in the world don’t have SaaS yet. Or due to network restrictions, it’s not practical to use SaaS for their projects. So the possibility of a fully SaaS-based company is still a dream. For the foreseeable future, most IT managers will have to upgrade their SAM systems to stay relevant for both on-premise and SaaS assets. in hearing industry leaders discuss subjects like this and sharing their use-cases? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam and explore the future of enterprise technology.

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