Early ERP SaaS providers such as NetSuite and Intacct deliver full featured ERP suites which include accounting software, distribution software, manufacturing software, human resources software, and customer relationship management software, but both have been challenged.
ERP heavyweight SAP announced its entry into the ERP software as a service market.
Oracle acquired Salesforce.
com or NetSuite in order to enter the SaaS market.
Whether the smaller SaaS ERP vendors can hold firm against the inroads being made by so many software giants will depend on the larger companies' ability and willingness to embrace the SaaS ERP model over the traditional ERP on-site model of software system solutions.
So, when faced with these two options (hosting ERP software internally on own servers or hosting the software somewhere else), how should a company respond when undergoing an ERP search? Well, there are four important points that should be part of the ERP selection process, and it should be kept in mind that there are natural tradeoffs between the two options.
That means that to make the best decision, a company has to thoroughly prioritize and evaluate each specific point as it applies to its needs and requirements.
The first one to be aware of is: simplicity.
As a general rule, it can be said that SaaS is simpler to deploy from a technical perspective.
Since businesses do not have to buy additional servers or install the software, it means that the software can be easily deployed.
On the other hand, the high level of technical ease may create additional business complexities that would not come into play with traditional ERP software systems.
Flexibility is also crucial and so it is important to keep in mind that SaaS cannot be customized.
This fact reduces the technical difficulties that arise in connection to making changes in the ERP software, but at the same time it takes away the possibility of configuring the software exactly to one set of needs.
And, conversely, companies that utilize SaaS sometimes have well-defined business processes that are not able to be changed to fit the software.
Traditional ERP does not require the internet to be working, provided users access the software from inside the company's own network, and this represents the next issue.
SaaS is entirely accessed through the web, which means that when the internet is down the software solution is useless.
On the contrary, though, companies with SaaS can make use of the software from anywhere internet access exists.
In general, SaaS can be deployed at a much smaller initial cost, and this is the fourth important difference between the two options.
This is very appealing to businesses without huge reserves of capital.
Still, the ongoing annual payments might end up being higher for SaaS in the end -after all, with the SaaS model, a company has to pay to use the software - and this fact should not be overlooked.
As with every other 'new best thing', the number of vendors offering SaaS ERP has grown since the inception of the solution.
In a 2009 report by ERP expert Cindy Jutras, the Vice President of Research Development lists nine SaaS ERP vendors in business today.
This number represents three additional vendors from the 2008 report.
According to Ms Jutras, "While the options are still relatively limited, they are expanding.
" The 2009 list included the following vendors: Activant with ERP available as both SaaS and on-premise; Epicor 9 with a broad solution across many verticals, sold as both SaaS and on-premise; Everest Software, also available as both SaaS and on-premise; Glovia on Demand with solutions offered as both SaaS and on-premise; Infor Syteline, accessible solutions in SaaS and on-premise; NetSuite which is only offered in SaaS environment that targets non-manufacturing and light manufacturing companies.
ERP heavyweight SAP announced its entry into the ERP software as a service market.
Oracle acquired Salesforce.
com or NetSuite in order to enter the SaaS market.
Whether the smaller SaaS ERP vendors can hold firm against the inroads being made by so many software giants will depend on the larger companies' ability and willingness to embrace the SaaS ERP model over the traditional ERP on-site model of software system solutions.
So, when faced with these two options (hosting ERP software internally on own servers or hosting the software somewhere else), how should a company respond when undergoing an ERP search? Well, there are four important points that should be part of the ERP selection process, and it should be kept in mind that there are natural tradeoffs between the two options.
That means that to make the best decision, a company has to thoroughly prioritize and evaluate each specific point as it applies to its needs and requirements.
The first one to be aware of is: simplicity.
As a general rule, it can be said that SaaS is simpler to deploy from a technical perspective.
Since businesses do not have to buy additional servers or install the software, it means that the software can be easily deployed.
On the other hand, the high level of technical ease may create additional business complexities that would not come into play with traditional ERP software systems.
Flexibility is also crucial and so it is important to keep in mind that SaaS cannot be customized.
This fact reduces the technical difficulties that arise in connection to making changes in the ERP software, but at the same time it takes away the possibility of configuring the software exactly to one set of needs.
And, conversely, companies that utilize SaaS sometimes have well-defined business processes that are not able to be changed to fit the software.
Traditional ERP does not require the internet to be working, provided users access the software from inside the company's own network, and this represents the next issue.
SaaS is entirely accessed through the web, which means that when the internet is down the software solution is useless.
On the contrary, though, companies with SaaS can make use of the software from anywhere internet access exists.
In general, SaaS can be deployed at a much smaller initial cost, and this is the fourth important difference between the two options.
This is very appealing to businesses without huge reserves of capital.
Still, the ongoing annual payments might end up being higher for SaaS in the end -after all, with the SaaS model, a company has to pay to use the software - and this fact should not be overlooked.
As with every other 'new best thing', the number of vendors offering SaaS ERP has grown since the inception of the solution.
In a 2009 report by ERP expert Cindy Jutras, the Vice President of Research Development lists nine SaaS ERP vendors in business today.
This number represents three additional vendors from the 2008 report.
According to Ms Jutras, "While the options are still relatively limited, they are expanding.
" The 2009 list included the following vendors: Activant with ERP available as both SaaS and on-premise; Epicor 9 with a broad solution across many verticals, sold as both SaaS and on-premise; Everest Software, also available as both SaaS and on-premise; Glovia on Demand with solutions offered as both SaaS and on-premise; Infor Syteline, accessible solutions in SaaS and on-premise; NetSuite which is only offered in SaaS environment that targets non-manufacturing and light manufacturing companies.