Giva provides some valuable tools to help you better understand the Total Cost of Ownership (TCO) of owning software applications and comparing it to the SaaS approach.
The purchase price of software licenses and annual maintenance fees you pay a vendor are a very small component of the true TCO.
Hardware, databases and related purchases are important to consider, but they are not as large as the actual labor required to manage and maintain the application and the infrastructure. Gartner Group estimates some of these costs and Giva will provide them to you in an Excel spreadsheet if you request a TCO analysis.
Labor is an enormous component that is always over looked and universally underestimated due to human bias. It's often hard for IT people to admit that an outside vendor can do a better job and be more cost effective. The fact is that SaaS vendors have enormous scale and efficiencies of building, managing, maintaining and hosting an application for 100,000s of users vs. your company trying to do the same for your IT department which is of course many many orders of magnitude smaller.
When your CIO says, "we have plenty of IT people to do all this work", respond by saying, "Let's look at your list of IT projects for the last 12 month...are you ahead or behind schedule?" Invariably, you will find that they are significantly behind schedule on many key revenue impact projects because the IT dept is spending a lot of time just to keep the infrastructure up and running instead of focusing on strategic projects that impact/generate revenue to the company. As you well know, a help desk/customer service organization does not generate revenue for a company.