For a few decades, ever since enterprise resource planning and ERP software solutions hit the market, smaller businesses could only sit on the sidelines and watch their larger competitors enjoy the benefits of ERP software applicattions. Historically, only large manufacturers could afford the costs and resources involved with implementing the expensive and complex ERP systems such as the first generation enterprise solutions from ERP vendors such as SAP and Oracle that further streamlined their operations, optimized their resources, and widened their competitive gap from their smaller rivals.
However, since the advent of the internet and third party hosted software applications, the dynamics of the ERP industry has changed dramatically. With cloud computing on the rise and with robust ERP sofware applications and other enterprise sofware solutions hosted by a growing number of service providers such as with CRM (customer relationship managemnet)applications, the landscape of ERP solutions has opened the doors to companies of all sizes and industries by making the once out of reach applications affordable and user friendly.
The foundation behind the benefits SaaS ERP applications versus on-premise ERP applications make alot of sense. A key benefit of web based applications or cloud computing is that not only is the software development and R&D placed in hands of the service provider, the management and deployment of the ERP software system is outsourced as well.
The outsourcing of software management and deployment of an ERP application has significant benefits to the business customer. For one, the cost of the application is dramatically reduced making SaaS ERP software affordable to the masses. Historically, only large businesses could afford the licensing fees of the complex on-premise ERP applications and had the internal IT resources required to maintain, upgrade and deploy the solutions. Offloading these costly burdens to the service provider not only makes SaaS ERP software much more affordable, it allows organization with minimal resources to focus on their core business and not on managing their software and technology.
Other benefits of cloud computing and SaaS ERP systems is that there is virutually no business distruption due to deployment, integration, maintenance and upgrades. Not only do these benefits contribute to the affordability of web based enterprise systems, it enables customers to utilize the latest upgrades and features of the ERP system in real time. A common factor for low ERP software utiliztion for traditional on-premise ERP applications is that a large majority of businesses do not have the latest version of their ERP system deployed due to the expense, resources, business disruption and general "pain" associated with software upgrades.
With all of these benefits afforded by SaaS software applications, many companies are still debating the viability of a full ERP system that is web based. Many companies, both large and small, are willing and eager to bring on board components of an ERP system via the web, such as CRM or sales automation SaaS applications. However, the complexity and issues of bringing an entire full ERP software solution in house via a web based application is causing a great many companies to pause.
For example, one large risk of an web based ERP application is that a company would be placing their entire mission critical system in the hands of one service provider, or one point of failure. For many CIOs, this is too much of a risk to shoulder, particularly when most of the SaaS ERP vendors do not have the same history and longjevity as their large, on-premise ERP vendors. This one example underscores the adoption issues faced with any new technology and one that may be overcome with each year. The fact is that many companies and the population in general are still brick and mortar in mentality and place alot of merit in the tangible qualities and this mindset may be the hardest thing that SaaS ERP vendors will need to overcome over the years.