SaaS (Software as a Service) are cloud-based solutions that businesses have been using for years, especially for HCM (Human Capital Management) and CRM (Customer Relationship Management), but many have shied away from implementing ERP (Enterprise Resource Planning) as a cloud-based solution. Many organisations in the past were concerned about security issues that could occur from deploying a mission-critical solution like ERP to the cloud. However, as SaaS ERP has become increasingly established it is apparent that cloud-based ERP can even be more secure than traditional on-premise solutions.
The money spent worldwide on cloud-based ERP Momentum is growing and according to Forrester Research it is expected to rise by 21 percent a year through to 2015. So what are the benefits behind cloud-based ERP and is it possible for your organisation to gain a competitive advantage from using this SaaS deployment model?
1. Low Initial and Predictable Ongoing Costs
SaaS solutions are provided on a subscription basis, therefore companies with limited budgets can greatly reduce their initial capital costs by investing in an ERP system. The software becomes a monthly operational expense, allowing customers to spread the cost over time in a pay-as-you-go manner. In addition, most SaaS vendors provide assurances that customers will not face large fee increases to continue using the solution once the initial term expires by capping fee increases.
2. Reduced Cost of Ownership
Customers only pay for users that actually use the software with a SaaS solution. Businesses don’t need to invest in all the peripheral resources and technology to support an on-premise deployment. If the needs of the business expand over time, the customer can simply add users at a pre-specified cost without needing to worry about investing in additional resources (e.g., hardware). In addition, with a shared, multitenant SaaS model, vendors can pass along lower costs dueto the economies of scale achieved through the use of a shared data center, network, and management services.
3. Reduced IT Complexity
The SaaS model transfers the burden of managing and keeping the system up-to-date and running from the customer to the software vendor. The software vendor takes responsibility for maintaining the entire infrastructure including: networks, storage, operating systems, databases, application servers, Web servers, disaster recovery, and backup services. Further, SaaS eliminates the need for customers to upgrade their software to the latest release and to update outdated infrastructure (including hardware) to support major software upgrades.
The software vendor takes responsibility for all upgrades, ensuring that the system is always running on up-to-date hardware and the latest software version.
4. Greater Reliability
SaaS vendors typically offer reliability that exceeds that provided by the IT departments within most job shops and small manufacturers. Due to the economies of scale associated with SaaS solutions, vendors can make significantly greater investments in skilled staff and technology than an individual company. These investments go towards ensuring performance, reliability, and security. In addition, most SaaS vendors offer service level agreements that guarantee
uptime, typically 99.5%, assuring customers of system availability.