Does SaaS Model Work for ERP?

Ann All

We just blogged about SMBs' growing interest in ERP and the efforts of big vendors like SAP and Microsoft to appeal to that interest. Then we encountered some statistics on IndustryWeek that show why so many SMBs seem ready to invest in ERP.


According to the Aberdeen Group, 14 percent of SMBs do not have an ERP system. The ERP systems of others are getting pretty creaky -- older than 10 years for 20 percent of SMBs and five to 10 years old for 31 percent of SMBs.


A solution that may appeal to many SMBs is hosted ERP, a model exemplified by Workday, a company recently launched by several former PeopleSoft executives.


In this mini-case study of a manufacturer using a hosted ERP solution from Glovia Systems, also in IndustryWeek, the company uses the product for purchasing, inventory management, MRP and support for a range of financial operations.


One of the biggest benefits, says a company executive, was that the product took IT troubleshooting off his lead engineer's crowded plate, freeing him for more strategic tasks. The company's previous on-premises system was costly and expensive, he says.


While the SaaS model has definite advantages, including reduced capital investment and the reallocation of resources mentioned above, some experts contend it's not the right choice for tasks that involve lots of company-specific processes -- which is certainly the case with some ERP systems.

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Add Comment      Leave a comment on this blog post
Apr 20, 2007 6:26 PM Doug Hadden Doug Hadden  says:
Does ERP actually work (hosted or not) for small and medium size businesses? I think that it is instructive to understand that the definition of what is "small" and what is "medium" is not well understood. For example, a company with a $100M turnover would be considered "small" by many ERP vendors. My sense from reading the literature (our company sells to governments exclusively), is that large ERP vendors tend to have more success when the customer has a high capacity, typically in the $1B+ turnover. There are really no economies of scale to be achieved for these companies to move to SaaS because of the need to customize. My view is that mid-tier ERP has been successful in the SME market and that large vendors require more thought in making their software accessible whether hosted or not.The SaaS market is showing success in parts of the ERP continuum, particularly in CRM with Salesforce and in Human Capital. Salesforce seems to have found the magic to provide simple applications with the right amount of user configuration and platform customization to appeal to most SME customers. I think that we will see this as a pattern where E-Procurement, Supply Chain, Fixed Assets and other parts of the ERP breadth will emerge. The pattern also seems to require that vendors work bottom-up to address this market rather than "dumbing down" an ERP system. Reply
Jun 2, 2007 8:44 AM sunish sunish  says:
only informision Reply
Jul 21, 2007 9:09 AM S Vijay Venkatesh S Vijay Venkatesh  says:
Thanks to the cost effective Internet bandwidth. For the SME customers, ERP on a SaaS model is the genius of both ends. Get the power of ERP (like big organisations) with out huge initial investments and complexity of maintaining the same.Is my data safe?Gold is more safer in a bank rather than in one's own house.People had the same doubt about ATM's. Not long ago, just 6 years back. Today it is reality. I do agree, there were some breach. It is like road accident. The safety aspects to be improved. There is not question whether to drive are not.But it is important to select a right Datacenter like STPI (Software Technology Parks of India).SaaS model stay has come there to stay. SMEs don't watch from the galary. Come and adopt ERP on SaaS model and beat your competition. Reply
Feb 29, 2008 10:30 AM Sarbadaman Sarbadaman  says:
Will the ERP on Saas model be customisable....Lets take Example of SAP will all its functionality except CRM , Procurement or HCM work in Saas model ???? HOW?? Reply
Jun 18, 2008 1:12 PM praveen praveen  says:
How Saas is useful in the Business Intelligence projects?I was working on Business Intelligence since five and half years. And also if any one is having Development methodology project for BI. please let me know.Thanks & Regards,Praveen Kodi Reply
Jun 28, 2008 4:52 PM Nikki Patni Nikki Patni  says:
The SaaS ERP for SME will be very attractive for the New Users who do not have ERP. The SME who are using product based ERP will also be positive to switch to SaaS based ERP. There are many companies who insist to have Customer ERP will be of the least interest or ignore SaaS.Many SME users are mainly keeping distance with SaaS ERP because of the Data Security issue. They will start thinking for SaaS once they will come to know the benefits of the SaaS based ERP.There is no stopping for the SaaS ERP providers who will be able to make their product for the real benefit of the Customer. Since the ERP for SME is as complex and vast so the SaaS provider has to continuously upgrade or clean up their product to fit all types of Customer. This will be a big challenge for the SaaS ERP providers. Reply

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