As we have noted,  due to the multiplicity of factors and multipurpose functions required for the process of successful global market penetration, SaaS erp solutions are of little use and are better suited for companies with simple and minimal specific needs, who intend to localize their operations to a single distinct geographic market sector (or small number of sectors), thereby confining their activities within a restricted area for promoting business growth and involvement within a limited number of industrial sectors.

SaaS Erp or Traditional ERP systems

The Cost Risk Factor: Which of the Two is More Expensive to Maintain

If used for locally confined operations, then SaaS erp is the better option for small businesses but especially start- ups who are just starting to learn about the benefits of enterprise resource planning software systems and how ERP is changing the face of the industrial scene as we know it on a global level.

Why SaaS erp Systems Over Time are Less Cost-Effective and become More Expensive in the Long Run
Other benefits include the fact that SaaS systems are cheaper than traditional ERP software. While this may be true in the beginning stages of implementation, on the other hand over time SaaS erp applications become more expensive to maintain because the customer pays annually for use of the software, since it does not own the software but leases it. Additionally, the cost naturally may increase as tax rates go up, and the more the company grows in size, number of employees, business partners and market potential. (Of course one must also remember that this is true in some cases for traditional ERP systems as well, since the more the number of applications and multipurpose user options are integrated into the software, the more expensive the product becomes. Also, the inclusion of add-ons and other innovative customization features, over time will also make the product more expensive to maintain- especially if the company intends to re- customize or revise the software on a frequent basis as a marketing strategy or to keep ahead of competitors).

It should be remembered at this point, that the main purpose of SaaS erp solutions is to reduce costs for the customer in connection with software, hardware and support. In relation to this last point, another significant issue arises if the Internet accidentally goes down; the failure to provide regular 24/7 customer assistance and technical support online and in real time, will have definite adverse effects on the business of the customer, since the problem must be solved by the host provider/vendor and the customer is not assured that the issue will be solved in a timely fashion- especially if the erp vendor has a questionable reputation in professional standards or in adequate technological innovation and expertise. Since eliminating time constraints or delays is one of the primary objectives of ERP systems in general, and is also one of the main concerns of every business if it is to keep on top of competition and endure some degree of survivability in the market, if online accessibility is not possible then the process of ERP implementation and deployment is interrupted and comes literally to a stand- still.

Written by :

Amy Cruz