To SaaS or Not to SaaS--That's the Question

So you've decided to buy your solution instead of build one. This doesn't mean that it's easy to choose which product, or even what kind of solution to purchase.
Take the choice between installing software on your own equipment--the "on-premise" solution vs. leasing a solution that runs on the vendor's servers, or getting your software "on-demand." The latter is also referred to as "Software as a Service," or SaaS.
How do you go about making this decision?
Source: CRM Buyer, http://www.crmbuyer.com