ERP Saas

ERP software as a service

A new development in the area of ERP is ERP software as a service.  A growing number of small, start-up vendors are offering ERP applications as software-as-a-service. These applications are hosted by a third party, eliminating the need for a business to install software on the company's servers the way traditional ERP is handled. With SaaS, participants access their data via a Web connection.

Sales of ERP software as a service applications earned eight billion dollars in revenue in 2009.  That was a twenty percent growth over 2008.  Projections for 2010 are that there will be another double digit rise in sales.  Perhaps not surprisingly, it was the failing economy that made the less costly SaaS more popular.

ERP software as a service possesses some excellent selling points.  First of all, the initial investment cost is much less because a business is not purchasing a system but rather paying a month subscription bill.  A second selling point is that because there is no software to install on-premise, the implementation time is months shorter than with traditional ERP systems. Yet another selling point is that the vendor is able to make changes and improvements to the software without bothering the customer.  The vendor is controlling the applications so upgrades and fixes occur more often and with less hassle.

SaaS solutions are slowly advancing in popularity.  Nevertheless, there remain some serious barriers for businesses looking to buy, such as data security and privacy. One major barrier is ERP vendor longevity and track record. Any investment made in technology, regardless of the cost, will be a loss if the vendor supplying the service is not in business in a few years.

Therefore, many businesses prefer to deal with an established vendor than to take a chance on a newer company selling SaaS.

In addition, businesses note a real trade-off between SaaS and ERP, and each company must decide which it prefers. ERP can currently be deployed on a business’ servers or it can be hosted by a third party and there are benefits to both ways. For example, SaaS is easier and faster to implement because there is nothing to physically install, but the high level of technical ease may create additional business complexities that are not experienced with traditional ERP. Businesses that own their ERP have greater control; they can then customize it or integrate it with other software.  SaaS, on the other hand, is not as flexible, but some of the technical problems faced by competing software packages are lessened. ERP software as a service carries a much reduced cost compared to purchasing traditional ERP, however there is an ongoing monthly cost to ‘renting’ SaaS.

Written by :

tracey boxer