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SaaS and ERP: Tearing Down the Walls of On-Premise ERP
In the world of SaaS applications ERP has been a laggard. ERP solutions have typically been been built with very expensive and highly customized software, while SaaS applications have been at the other end of the price spectrum and while they are often built to have some amount of configuration flexibility, they typically have been one-side-fits-all applications.
Things are beginning to change. SaaS-based ERP is no longer an oxymoron. A report from the Aberdeen group found that 39 percent of companies now are considering the viability of using a SaaS-based ERP system. Between 2009 and 2010, that number has group by nearly two-thirds. The benefit most frequently cited by those interested in SaaS is the lower total cost of ownership (TCO) and savings from reduced internal investment in IT. Interestingly, and not too surprisingly, the popularity of SaaS has come at the expense on-premise ERP. In fact, the number has dropped 18 percent over the last year.
So, the interest is there. But customers still haven’t made the leap. 2011 looks like it could be the watershed year when SaaS ERP will take off, but then again, it could turn out to be just a bust, hampered by worries around security and loss of control. SaaS ERP vendors must do all they can to convince customers that they can protect their data assets before any mass move to the cloud can begin to happen. That will be a tough sales job, but it is beginning to look like it is more of a question of when it will happen then if it will happen.
