The ERP/SaaS Conflict Is a Myth

Dennis Byron

A good number of the year-end retrospectives about the comings and goings of enterprise software revolve around some mythical conflict between ERP software and Software as a Service (SaaS). This blog post entitled Big ERP Vendors Making Same Mistake as Big 3 Automakers (U.S. centric metric) jumps to this blog post by Bruce Richardson at AMR, also running along the SaaS fault line.


I don't know either author, but I know Bruce Richardson has been analyzing ERP longer than the 15 years that I have been doing it (and probably since before Gartner started calling it ERP). So he also knows that SaaS - back when it was called timesharing, and later service bureaus, and still later called ASPs - predates ERP. (I am not going to get into the differences among the three such as multitenancy, etc., which are simply based on natural evolution; timesharing, service bureaus, ASPs and SaaS are basically the same thing. But see my recent blog post based on an interview with Bryan Doerr if you want to dig a little deeper into some of the fine points.)


Most important, there is no either/or between ERP and SaaS. ERP is a value proposition (integrated data model and logic accessible from multiple user interfaces, and so forth) while SaaS is a delivery mechanism. If there is any conflict, it is the ageless difference between point product and ERP. Most SaaS products are point products, which is why thin analyses conflate the two. ERP emerged from Ollie Wight's MRP concept because of all the drawbacks of point products. Those drawbacks - and the advantage of the ERP value proposition - endure.


In addition, I am not following the bloggers' subtleties about hybrid SaaS/ERP. By the bloggers' own definitions (with which I disagree for the reasons stated above), SAP and Microsoft have offered hybrids for years. And Oracle has been doing SaaS for 10 years via a semi spin-out called NetSuite (owned by Larry Ellison; at one time offered by Oracle sales people) and offers other variants such as hosting directly. Infor, Sage, Intuit, Lawson et. al. can get you there directly or via partners.


The fact is the big ERP players' users do not want this hybrid, not because they have anything against the delivery model but because they don't think off-premise fits with the ERP value proposition. Lawson's Harry Debes went a little over the top on the issue earlier this year, but other ERP players report the same thing.


And it's probably more an industry thing because SaaS-delivered ERP has been popular in health-care delivery, community banking, professional services, construction and other services industries since - since back when we called it timesharing.

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Jun 4, 2011 12:18 PM Brett Beaubouef Brett Beaubouef  says:

Great article - thank you for sharing.  I am very excited about Cloud ERP and the potential opportunities for customers, however, I like to speak to the minority opinion for a balanced discussion.  Just as ERP was deemed the panacea for all business automation pains, Cloud ERP is positioned as a revolutionary approach to deploying an ERP solution.  Cloud ERP provides a solution that is flexible, adaptable, scalable, efficient, and affordable.  Customers can enjoy painless upgrades, rapid deployment, and easy customization along with availability 'anywhere at anytime'!  Practically speaking, Cloud ERP is just another deployment option available to customers.  The activities required for an 'on premise' ERP implementation are also required for Cloud ERP.  The scope and responsibility for the implementation activities may be different but most assuredly they are still required.  Let's further discuss the key impacts that a Cloud ERP deployment will have on the implementation.


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