ERP Growth Not as Strong as Other SaaS Applications

Ann All

As someone who's written about the potential of ERP software delivered as a service to steal at least some market share away from on-premise ERP software, I was interested in the seemingly lukewarm showing of ERP on a list showing growth among SaaS applications, part of a report issued by Gartner that predicts robust growth for the overall SaaS market over the next few years.


According to Gartner, ERP SaaS revenues were fairly flat from 2008 to 2009, while other categories saw stronger growth. I contacted Gartner Research Director Sharon Mertz for her thoughts, and she offered several observations.


She said the SaaS model does not lend itself well to various ERP categories, including asset management and capital management, in the manufacturing industry because many of its processes are highly customized and involve robotics and other sophisticated gear. She's not alone in that view. Aneel Bhusri, co-founder and co-CEO of SaaS ERP provider Workday, said as much in a podcast interview with Dana Gardner, stressing that services companies rather than manufacturers are the target market for Workday applications beyond human resources and payroll accounting.


With existing ERP suites, many companies are reluctant to remove the installed software and start over with SaaS because they've already invested considerable resources, not only in upfront costs but continued spending on customization and support, she said. SaaS ERP adoption is higher among SMBs, but it's a highly fragmented market. SaaS ERP providers are beginning to move upmarket, by pitching their products for departmental deployments, but companies don't typically think of purchasing ERP software that way.

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Add Comment      Leave a comment on this blog post
Nov 24, 2009 5:43 PM Douglas Johnson Douglas Johnson  says:

I think SaaS adoption will grow in the ERP space as obstacles such as customization, conversion from on-premise to SaaS, and VAR friendly business models are adopted. According to one article (http://erpcloudnews.com/2009/11/general-saas-growing-faster-than-erp-saas/), the good news is that all these things are happening today.

Mar 9, 2010 2:23 PM Rohit Tiwari Rohit Tiwari  says: in response to Douglas Johnson

SaaS ERP is not only simpler and cost-effective to deploy but also to maintain. Software maintenance and upgrades are made by the vendor, who also takes care of all security issues. This takes off a lot of the management shoulders.

You referred to internet accessibility as problematic when clearly remote connection is a great value to many businesses.

A good ERP system will solve business-specific problems and if the system doesn't offer the proper solution, it doesn't matter if it's SaaS or traditional.

Do analysis of Drishti-a webbased mini ERP by B2C Systems Pvt. Ltd.


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