For many companies that are devoting valuable IT and personnel resources on complicated enterprise resource planning or ERP software and costly enterprise systems management tasks, web-based ERP software solutions such as Software as a Service or SaaS apps can be a viable solution to alleviating software management headaches. SaaS eliminates a lot of the complexity by simply outsourcing the tasks to an outside service provide or ERP vendor.
Web based solutions have gained a lot of popularity particularly from the SMB market delivering a lot of value in an affordable model. Outsourcing ERP systems management to enable a business to focus on their core competencies makes a lot of sense. However, web based ERP applications may not be the optimal solutions for your business. During the ERP software evaluation process many organizations both large and small are deciding on a hybrid solution of both on-premise ERP systems with web-based ERP modules integrated within.
The benefits of SaaS vendors and web based ERP solutions are many. The key drivers to their popularity are their lower cost of implementations. A SaaS ERP vendor owns and hosts the enterprise application at an offsite location at its own facilities. The users access the application through the internet or thin client. The IT model enable minimal capital expenditure as no technology is being purchased or implemented. The technology is provided under a service model and is purchased on an as-used , pay as you go pricing model. In essence the technology is a variable cost.
All of the IT resources and expenses required to purchase the software, maintain, manage, upgrade, install, upgrade, host, secure and troubleshoot bugs and outages are eliminated. Services firms like accounting firms who spend significant amounts on IT software and their ERP systems can eliminate these considerable expenses and focus on their core area of expertise, finance and accounting.
In general the key benefits of using a SaaS ERP vendor is that they are experts in their core business, ERP software development, delivery and maintenance and with their services you are getting the best resources dedicated to this area than a business could provide or afford itself. One key example is software upgrades and version releases. With a SaaS ERP system the upgrades and refinements to the enterprise software is made available to customers in real time. Because technology innovations and improvements happen at the hosted vendor level, customers get whatever refinements are released each time they log into the application.
However, in many cases, although there is a much lower upfront cost and capital commitment associated with web-based solutions upfront, in the long run SaaS ERP software solutions may end up costing more in the long run depending on your number of users and the cost of licensing the technology. Another key aspect of web based applications is that businesses are giving up a lot of control over critical business functions to an outside party. This is a critical issue with companies in the health care and financial industries where the security of customer data is not only critical, it is government regulated. Also, the risks inherent with technology companies going out of business, this may be too high of a risk burden to bear for an organization.
Generally speaking, business that seem to be a natural fit for SaaS ERP software functionality are those that are pretty much standard across industries like, word-processing, expense-reporting, spreadsheet, email and online conferencing applications. The same rule of thumb seems to go with a few vertical markets such as companies in the financial arena that trade stocks, in healthcare such as in medical billing and in travel businesses such as flight reservation activities