It may not be cost effective, but if you think that hiring two people will be all you spend when you move everything on prem, you'll be in for a bit of a shock.
The main thing for me as a prior exec is HR / the org will control your people cost, but they tend to be significantly more flexible over the compute / vendor costs. I'm not saying you can add an non-forecasted 20% to your headline spend, folks would get upset at that, but if you decide to consolidate all your services into 5 beefy VMs as opposed to 100 smaller ones, nobody cares.
Do that with people though, and folks tend to lose their shit pretty quickly. The problem is this has several outcomes:
- You're getting people with less experience in the "been there, done that" category, which means the work takes longer. - Since they've not yet experience the pros & cons of decisions. It's likely they'll make some decisions that won't pan out. - They'll leave once they've realised they've fucked up and they now have the "been there, done that" badge, so they can take that experience to a market that values their skills. - Result is you end up hiring 2+ folks to do 1 persons job. - Since you falling foul of Brookes law, you're unable to execute, you work with vendors. - They charge astronomical figures; but since they're not a person, the politics of envy don't apply, thus the org may begrudgingly accept it. - You then need more "cheap" resources to do / maintain the integration work.
The problem being your TCO goes through the roof because you're not hiring quality.
Now going back to your point. Besides economics of scale, the SaaS provider is actually deriving pretty stellar profit margins for a wrapper of people and compute. I would argue these economics of scale quickly dissipate when you're also funding sales, marketing, legal, founders, executives & investor concerns, and further when you're now funding your own internal procurement, legal, and SMT to sign off the contracts.
That said, couple of additional points:
- I didn't mention on-prem. My early career was developing an IaaS provider ( 2007 times ). Folks spend a lot of unnecessary money doing on-prem, but it's a fairly large undertaken for a small dev team with a lack of hardware experience. Most folks should start in cloud unless they are strong on-prem already.
- I didn't mean all saas, the focus was on observability. Though anything you need a large number of seats and has an SSO tax should be scrutinised.
:)
