"Adopting Software-as-a-Service (SaaS) might be widely seen as a
way for enterprises to cut costs and speed deployment, but things
may not always be as they seem, according to industry analyst firm
"Robert DeSisto, an analyst at Gartner, agreed that SaaS
applications have a lower total cost of ownership (TCO) for their
first two years because they do not require large capital
investments for licenses or support infrastructure.
"However, they lose that advantage from an accounting
perspective beginning in the third year of a deployment, he said.
That's because on-premises applications depreciate as a capital
expense, while SaaS applications are booked as operating expenses
and cannot be depreciated."
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