2. High Switching Costs of Moving to Online
Many companies already have a substantial operational investment in SharePoint On-Premises. If that describes your organization, it might not be worthwhile to make the switch to Online. This is especially the case if you have integrated external customers and contractors into your existing systems.
Fundamentally, the choice between On-Premises and Online is a business decision, and must be evaluated in terms of ROI. Even in cases where Online presents clear improvements over On-Premises, overly high switching costs can make it fiscally unfeasible to make the transition.
And in many cases, On-Premises might actually be the better value over the long run as well as the short run. Here’s why:
Many people have the perception that Online is more adaptable than On-Premises. So they assume that even if the switch is painful in the short run, the increased flexibility will pay off over the long run, since future switching costs will be lower – like ripping off a band-aid quickly rather than slowly.
However, this is a misconception, because Online is in fact less adaptable than On-Premises over time. With On-Premises, you have an opportunity to re-design the system every time a new version is rolled out, but that’s not true for Online. After all, you can re-image a hosted solution like On-Premises, but you can’t re-image Online. So when you move to Online, you actually have to engage in more thorough planning to make sure you’re choosing the right plan, buying the right number of seats, and investing in the right capabilities.
In other words, while Online might be more flexible for users due to cloud-based features, it is actually less flexible from an IT perspective. So moving to Online not only involves high switching costs today, but also sets you up for higher switching costs tomorrow.