ERP Strategy: Implement ERP as SaaS and increase ROI

These days, we keep talking about the same thing again and again and that is, to reduce the cost and increase the return on investment specially return on IT investment as though IT is an enabler of growth but there is no tangible return on investment immediately after deploying a new system or upgrading a system. Coming to my favorite topic i.e. ERP - it normally requires sizeable investments and the best in class organizations expect the ERP to return its cost back to business in almost 2 years. This is important to justify continued investments in ERP in these troubled times.
Software as a Service or SaaS as it is popularly called, is generally gaining ground on the basis of this very logic. I tried to list down the benefits that a SaaS ERP model offers and wanted to share with the readers with two objectives - One is to make them a little more awaree of this new phenomenon that is leading the latest ERP wave even in this downturn and 2nd is to build this list with more points so that it is easier for organizations to genuinely compare the capex heavy traditional on premise ERP and service oriented SaaS model. Let's go through the list as below:
  • Faster ROI: As we all know that due to today’s economic downturn, ROI is more critical than ever. SaaS ERP implementations streamline all stages of the lifecycle including requirements gathering, process mapping and improvements, Building customizations, testing and training. contrary to the belief, a SaaS implementation is a complete, prebuilt application implementation done at the providers end but with full involvement of the customer's business. It is also more cost-effective to scale to multiple locations or suppliers/customers, and keep current with the most updated version of the systemas it is the reponsibility of the provider to present a time bound roadmap to the customer for upgrading the application in future
  • Capex down to minimum: Since we are buying a servcie and not the servers, we are not bothered on the the cost involved on the server acquisition and maintenance. I understand that the cost of the equipment will be inbuilt in the service cost but since it will be a staggered cost and not upfront, it is a huge benefit in today's scenarios. The pay per drink model minimizes risk because an enterprise can roll in applications based on business need (for instance implementing just the order management first, inventory management next and so on) as appropriate to the business need
  • Minimized Operational costs: The costs and resources required for ongoing maintenance, support, system performance and version control all go away with SaaS implementation. Data security, globalization, feature enhancement, connectivity, and safety are the responsibility of the SaaS vendor, freeing up the manufacturer to concentrate on core tasks. In addition, true multi-tenant architecture makes every customer instantly benefit from system enhancements
  • No plan needed to retain technical talent in turbulent market conditions: Since the ERP is run by your provider forever and you just based on outcome or transactions or number of users as the case may be, you are not required to keep costly technical consultants on your rolls. Please note that retaining ERP consultants after you go-live is much more difficult task than hiring them and SaaS model helps you overcome this hurdle too
  • Integrations simplified: Gartner estimates that up to 35 percent of the implementation costs associated with on premise ERP applications is for integration. SaaS ERP makes integration with other applicationsor hardware faster, easier and less risky
  • More choices available: SaaS has really evolved in last 3 years and there are many choices available for the customers to choose as per their specific business needs. This is contrary to the fac that still theer are just 3 or 4 major vendors for the on premise ERP that have captured most of the market
  • Flexibility added to your plan: As you will be paying as you drink and anytime you can switch loyalties towards another drink if you do not like the first one, it offers magnificent flexibility in planning your business needs vis-a-vis costs, functionality available and market trends - and all this at no extra cost, no depreciation worries etc.

I will stop here as the list of benefits that I could gather, are finished. Now I will look forward to the the readers to contribute and let us know if we more benefits of SaaS over on premise ERP, and yes please highlight the down side also so that we all can get a clearer picture before we take a decision.

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