Leasing a car is not a good analogy because the difficulty and cost to switch cars at the end of the lease is zero (or at least well defined). Leasing a car is a fixed duration, fixed amount payment with both the costs and the duration fixed by contract. Leasing is attractive to people and organizations that want the benefit of lower monthly/yearly payments in exchange for a higher total cost of "ownership."
SaaS is not a fixed amount nor a fixed duration. This is custom software with no alternatives, so escaping the "lease" is going to be more costly than purchasing up front.
If I were the manager in the story, I would see the choice as
1) Pay $5,000 per year for 10 years (with substantial cost risk due to the lock-in with the sourcing company) and then have to pay $100,000-200,000 to replace the software or
2) Pay $50,000-100,000 up front without the lock-in of the sourcing company.
Since the OP says "power systems engineering" in a "government type organization", it is not surprising that the organization is not terribly price sensitive ($50,000-$100,000 is peanuts to the power industry) and the SaaS is only offering a lower yearly payment in exchange for a substantial amount of risk and a substantially higher total cost.
He's pitching the wrong angle for this company / industry.
Comments
Leasing a car is not a good analogy because the difficulty and cost to switch cars at the end of the lease is zero (or at least well defined). Leasing a car is a fixed duration, fixed amount payment with both the costs and the duration fixed by contract. Leasing is attractive to people and organizations that want the benefit of lower monthly/yearly payments in exchange for a higher total cost of "ownership."
SaaS is not a fixed amount nor a fixed duration. This is custom software with no alternatives, so escaping the "lease" is going to be more costly than purchasing up front.
If I were the manager in the story, I would see the choice as
1) Pay $5,000 per year for 10 years (with substantial cost risk due to the lock-in with the sourcing company) and then have to pay $100,000-200,000 to replace the software or
2) Pay $50,000-100,000 up front without the lock-in of the sourcing company.
Since the OP says "power systems engineering" in a "government type organization", it is not surprising that the organization is not terribly price sensitive ($50,000-$100,000 is peanuts to the power industry) and the SaaS is only offering a lower yearly payment in exchange for a substantial amount of risk and a substantially higher total cost.
He's pitching the wrong angle for this company / industry.
1) is an expense and is usually easier to deal with, even put in an expense report
2) is a write off ad usually need multi-level approval. There is still lock-in as switching provider usually end up in a time consuming operation.
But I agree that the saas pitch for this type of industry might not have been the right choice.