Friday, 9 September 2011

7 Reasons to Look at Cloud-based ERP Solutions

Businesses have been using cloud-based solutions (also known as SaaS – Software as a Service) for years, especially for CRM (Customer Relationship Management) and HCM (Human Capital Management), but many have shied away from implementing Enterprise Resource Planning as a cloud-based solution. In the past many organizations feared the security implications with deploying a mission-critical solution like ERP to the cloud, however as SaaS ERP becomes more established its apparent that cloud-based ERP can be even more secure than traditional on-premise solutions.

Momentum for cloud-based ERP is growing with worldwide spending on expected to rise by 21 percent a year through 2015, according to Forrester Research. So what are the benefits behind cloud-based ERP and can your organization gain a competitive advantage from looking at this SaaS deployment model?

1. Low Initial and Predictable Ongoing Costs

Because SaaS solutions are provided on a subscription basis, companies with limited budgets can substantially reduce their initial capital costs of investing in an ERP System. Instead, the software becomes a monthly operational expense that allows customers to spread the cost over time in a pay-as-you-go manner. In addition, most SaaS vendors provide assurances that customers will not face large fee increases to continue using the solution once the initial term expires by capping fee increases.

2. Faster Implementations and Time to Value

As SaaS solutions are hosted and managed by the vendor, customers have no hardware to set up or software to install. The implementation is solely focused on configuring the system and, if necessary, importing data. Advanced SaaS ERP systems come preconfigured based on best practices to further simplify and expedite the implementation process. This translates into faster, less complex implementation projects. Because implementation is rapid and customers invest little up-front capital, but receive the benefits from the system as soon as they go live; customers achieve a faster return on their investment.

3. Reduced Cost of Ownership

With a SaaS solution, customers pay only for users that actually use the software. Businesses don’t need to invest in all the peripheral resources and technology to support an on-premise deployment. If the needs of the business expand over time, the customer simply adds users at a pre-specified cost without worrying about investing in additional resources (e.g., hardware). In addition, with a shared, multitenant SaaS model, vendors can pass along lower costs due to the economies of scale achieved through the use of a shared data center, network, and management services.

4. Greater Reliability

SaaS vendors typically offer reliability that exceeds that provided by the IT departments within most job shops and small manufacturers. Due to the economies of scale associated with SaaS solutions, vendors can make significantly greater investments in skilled staff and technology than an individual company. These investments go towards ensuring performance, reliability, and security. In addition, most SaaS vendors offer service level agreements that guarantee uptime, typically 99.5%, assuring customers of system availability.

5. Improved Support

When a customer reports a problem with an on-premise solution, that problem could easily be related to the hardware at the customer site, interactions with other software, the network, or other components that the remote support site has no visibility into, making troubleshooting difficult and time-consuming. However, in a SaaS environment, the vendor’s development and support teams control the entire environment, which gives them a high level of visibility and enables better, faster service.

6. Reduced IT Complexity

The SaaS model transfers the burden of managing and keeping the system up-to-date and running from the customer to the software vendor. The software vendor takes responsibility for maintaining the entire infrastructure including: networks, storage, operating systems, databases, application servers, Web servers, disaster recovery, and backup services. Further, SaaS eliminates the need for customers to upgrade their software to the latest release and to update outdated infrastructure (including hardware) to support major software upgrades. The software vendor takes responsibility for all upgrades, ensuring that the system is always running on up-to-date hardware and the latest software version.

7. Improved Business Focus

Finally, one of the most important benefits of the SaaS model is that it frees the customer from the responsibility of maintaining and managing the hardware, software, and infrastructure associated with ERP systems. Instead they can focus on and devote their time, staff, and resources to their core business and new strategic opportunities.

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