Software as a Service (SaaS) is a distribution model for software with wide-reaching applications. With SaaS, businesses can use and access software hosted by a third party as an enterprise resource management (ERP) cloud solution. But, are SaaS solutions the right fit for your business? In this blog, we review deployment options for software, providers, vendors, and the potential future for SaaS/Cloud ERP solutions, so you can better determine what makes sense for your business.
On-Premise software is installed on your servers. Because it is onsite, and not hosted by a third party, you will be responsible for upgrading the operating system (OS) and physical box periodically. You will likely need an internal IT staff member to maintain systems, or you will need to contract with an IT provider.
While you own rights to the software, you will probably pay annual maintenance for access to new versions. If you stop paying the maintenance fee, you can generally continue to run on the version you own and have access to your data. However, losing support for the version your business is using can lead to problems down the road. You will also have fees every year or two to upgrade your software to the current version.
The infrastructure of this software will be on your shoulders: You need to provide your own backup and remote access to the system. You also need to maintain the quality of the infrastructure so that the end user experience isn’t compromised.
Summary: You own the software, pay an annual maintenance fee for access to new versions and fees for the actual upgrade for versions you wish to deploy. Hardware is yours to maintain including operating system, backup, remote access, firewall and antivirus.
Hosted software is the same as on-premise, with server location as the exception: It is installed on someone else’s server, which you have to pay monthly per user for the access. With this hosted service, a few responsibilities move to the host: They provide data backup and IT services for the software.
Generally, you can access hosted software from any computer connected to the internet. Because internet access is required, however, this may be a possible bottleneck to user experience.
Summary: You own the software, pay an annual maintenance fee for access to new versions and fees for the actual upgrade for versions you wish to deploy. Hardware is someone else’s that you pay a monthly fee per user to access including backup. Internet access becomes critical but you have access from anywhere anytime.
With a SaaS/cloud solution, there is no install required for your business. You also don’t need to worry about periodic upgrades to the software. The cloud-hosted ERP provides backup, you can access from any internet-connected device (not just desktop computers), and you pay per user, per month for access to the system. You do not need an internal IT team to use the software, either.
However, the deployment option is not without its drawbacks. If you stop paying for the service, you lose access to the system and data. You are also completely dependent on an internet connection to access your systems. It may appear initially that SaaS is the most expensive option, but complete the cost comparison of all options to get a better picture of what SaaS might save you in the long-run. Primary SaaS/cloud ERP providers include Intacct, NetSuite, and Acumatica.
Summary: You pay a monthly fee per user to access the system. No upgrade fees and no infrastructure fees. Internet access is critical.
|Own the Software?||Yes||Yes||No|
|Own the Infrastructure?||Yes||No||No|
|Internet Access Required?||No||Yes||Yes|
Is SaaS a Good Fit For You?
You might be reading through these deployment options and still have no idea whether SaaS is a good fit for your business. Here are a few scenarios you might be in where SaaS can be the perfect fit:
- You are looking for software that has financial and CRM functionality only
- You have a small- to medium-sized company with standard, non-industry-specific needs
- You are a startup company that needs to deploy quickly with little to no IT resources
- You have multiple locations and/or remote employees where the cost of IT infrastructure would be high to support the business model with other deployment methods
So, where might SaaS not be a good fit? If you have industry-specific needs, or are in a vertical that is not currently being catered to by a SaaS/cloud software solution, you may want to look for a more customized option. Vertical markets are rapidly being released, but at what bleeding-edge cost compared to proven on-premise solutions?
Distribution and Manufacturing Industries and SaaS
Even if you have industry-specific needs, you may still find a tool that works well for you. Acumatica, for example, has currently deployed an ecosystem best for distribution and manufacturing companies. Here are a few other things to consider for distribution and manufacturing industries when it comes to SaaS solutions.
When it comes to distribution, the SaaS solution fit really depends on the vendor. Consider whether the tool is a fit for not only inventory, but shipping integration, warehouse management, and web/ecommerce integration before you commit to a purchase. Another thing to think about: The fit generally comes from the integrated third parties, not from the main cloud provider itself.
Manufacturing processes are the most difficult to move to the cloud because you need to integrate with machines and people on the shop floor. On-premise solutions have been around longer, and have deeper functionality than cloud solutions, so SaaS may not be your best bet in this case. Once again, many of the industry-specific solutions are provided by integrated third parties.
The Future of SaaS/Cloud Solutions
While some cloud solutions are moving faster than others depending on industry, on-premise solutions have been around longer and have deeper functionality. Cloud providers will need time to catch up, but what else do we see in the future of SaaS solutions?
Many of the primary vendors have created the platform for developers – Platform as a Service (PaaS) – to add industry-specific functionality to their tools. This will help them compete with established on-premise solutions without having to create the solutions themselves.
If you’re still trying to determine which solution is right for your business, contact the experts at Chortek today through our online form, or email Steve Krueger, our Business Technology Consulting (BTC) Principal, to learn more about our services.