Planning System: On-Premise or SaaS? Calculate the Inventory Impact Before You Choose the Technology

In this, the first solo episode of a new format, Adam Sobolewski breaks down a real business case for choosing a supply chain planning system. He compares an in-house infrastructure deployment (on-prem) against a SaaS model, showing the differences in CAPEX, OPEX, and cash flow using the same example.

THE SAME TOOL, TWO COMPLETELY DIFFERENT COST PROFILES

An analysis of a real supply chain planning system deployment compared two variants of the same solution: the on-premise model required almost a million złoty in CAPEX up front, plus rising operating costs (40,000 in year one, up to over 90,000 by year five). The SaaS model had no CAPEX at all, but OPEX alone started at 250,000 PLN in year one and rose to 620,000 by year five. The takeaway: on-premise hurts hard at the start, SaaS hurts less but for much longer — that's a completely different impact on company liquidity, not a difference in system quality.

WHERE THE RETURN ON INVESTMENT REALLY COMES FROM

The business assumptions were identical in both variants: sales growth (from 800,000 to 1 million PLN a year) from better product availability, margin improvement (160,000-400,000 PLN a year) from more accurate purchasing decisions, and — most importantly — inventory reduction, freeing over 800,000 PLN in cash already in year one, growing to 2 million by year five. Contrary to what most companies assume when investing in a planning system — expecting sales and margin growth above all — systems in this class most often pay for themselves precisely through reduced inventory value, not increased revenue.

PAYBACK VS. NPV: TWO DIFFERENT ANSWERS

Calculating a simple payback period, SaaS won clearly — it paid back within a year, on-premise within 2.7 years, which explains why small and mid-sized companies more readily choose the cloud model: it delivers financial comfort faster. But calculating net present value (NPV) over a five-year horizon, the picture flips: on-premise delivered around 1.8 million PLN in net value, SaaS only just over a million. Once the upfront investment is paid off, owned infrastructure becomes relatively cheaper — which is why large organizations with stable volume still often choose on-premise, despite the general market trend toward the cloud.

WHEN TO CHOOSE WHICH

A fast-growing company that cares about liquidity and doesn't want to freeze cash gains more from SaaS. A company with stable scale, strong in-house IT, and a long investment horizon more often comes out ahead with on-premise. These are general patterns, though, not rules — every case needs its own calculation before a decision is made.

EXECUTION MATTERS MORE THAN THE FINANCING MODEL

Even the best-calculated business case won't save a poorly run deployment — the financing model (CAPEX or OPEX) is only the first question. The practical takeaway: calculate the inventory effect first, and only then choose the technology and its financing model.