What is SaaS ERP, and is it the right fit for your organization? This blog post addresses the most frequently asked questions around SaaS ERP.
What is SaaS ERP?
If you're in the process of selecting an enterprise resource planning (ERP) system, you'll know that there are two main models of deployment for an ERP system. There's the traditional model, where the on-premises system is hosted internally on your private servers and managed by your in-house IT team.
Then, there's the popular cloud deployment model, which includes SaaS ERP, that comes with numerous benefits. SaaS (Software-as-a-Service) ERP is a system that is hosted and managed by the ERP vendor and accessed via the internet by end-users. As the name suggests, it is a subscription service, and you are billed on a monthly or annual basis.
Is There a Difference Between Cloud ERP and SaaS ERP?
While the terms Cloud ERP and SaaS ERP are used interchangeably, for the most part, there is a distinction to be made between them. Cloud ERP refers to any implementation hosted remotely on an ERP vendor's data center and accessed via a web browser online.
SaaS ERP is a type of Cloud ERP that uses the multi-tenant model. This means that as an organization using SaaS ERP, your system is managed by the vendor, and you use the same software and infrastructure as other organizations that have a subscription to the solution. SaaS ERP is typically more cost-effective, allows for integrations very quickly, and requires minimal effort from your in-house IT team.
SaaS ERP vs. On-Premises ERP: Factors to Consider
If you're considering a SaaS ERP system or debating between SaaS ERP and on-premises, here are some factors you should keep in mind during your ERP selection process.
Price & Total Cost of Ownership
SaaS ERP solutions are typically billed as a subscription on a monthly or annual basis. As the software provider manages and hosts the solution, you do not need to spend any money purchasing hardware like servers, securing the system, or maintaining a large in-house IT team to maintain your ERP solution.
For on-premises ERP software, organizations usually pay a hefty, one-time licensing fee in the beginning and are charged yearly maintenance fees. As the organization is responsible for maintaining their servers and updating the software themselves, there are additional costs associated with that as well. Generally speaking, your total cost of ownership is often lower on cloud and SaaS ERP than on-premises.
Implementation & Speed of Use
SaaS ERP implementations are much quicker than on-premises models because you do not need to set up or configure any hardware, and integration of other applications is much easier if they are cloud-based or from the same provider.
As on-premises ERP software is hosted and managed in-house, the implementation process is much more complex and may require custom integrations.
Considering the Advantages and Disadvantages of SaaS ERP
SaaS ERP is a popular choice as it leverages all the benefits of cloud ERP and more. Here are some advantages it offers over on-premises and single-tenant cloud ERP solutions.
Advantages of SaaS ERP include
No significant up-front capital is required to get up and running.
Has solid out-of-the-box functionality for core business processes such as inventory, finance, and more.
Software is always kept up-to-date and receives automatic updates from the vendor.
Easy to scale your business as you don't need to invest in additional infrastructure as you grow and costs remain predictable
Built-in security and disaster recovery plans to safeguard your data
Easily integrates with other cloud-based applications.
Disadvantages of SaaS ERP include
Less opportunity for customization and flexibility, which is necessary for enterprise organizations with unique or niche business processes.
Vendors handle the compliance and security side, so while security might be stronger, it may not meet the rules required by enterprises who work in highly regulated markets.
Is SaaS ERP Right for Your Business?
If you are an enterprise that has an unusual or niche business model or work in a highly-regulated industry with strict security requirements, SaaS ERP might not be the best fit. Single-tenant cloud ERP may be a better option. For most other organizations – in particular small and mid-sized businesses – will be able to reap the many benefits of SaaS ERP, including fast implementation time, lower starting and operating costs, and no in-house maintenance.
If you'd like to learn more about SaaS ERP and whether it is a right fit for your business, get in touch with the Kwixand Solutions team. We are a Dynamics 365 Partner based in Vancouver, Canada, and help small and mid-sized businesses across Canada and the US digitally transform.
