If you are a company that wants to stay competitive in 2021, it is undeniable that the implementation or improvement of the ERP system is a priority for managers with a vision for the future. Now the question is, what type of ERP systems best suit your needs, and which one will have the least impact on the operations and structure of the organization.
If you really want to achieve a business transformation that adapts to this new 4.0 digital era, an ERP SaaS or cloud is the most viable option to stay relevant in your sector.
A SaaS or cloud ERP system refers to a business management system that your company can access and use, but is hosted on a third-party vendor’s server. This is called cloud hosting or cloud hosting.
Many ERP developer and vendor companies are transitioning from local installation or “On Premise” to cloud deployment, which has allowed companies to have a wide variety of options of this type.
Advantages of an ERP SaaS system
Flexibility and scalability
The scalability of the ERP system is one of the most important aspects to consider. So that you understand me suppose that you are evaluating to buy a property.
In doing so, you have a square footage of limited land and the base structure that that space comes with. If at any point you wanted to make a change, the only option you would have would be to do construction remodels to add new spaces or tear everything down and start from 0.
Both options bring with them a great commitment, since they involve an investment with which you will have to live for at least a few years. This is very similar to buying IT infrastructure to host a local ERP system. If later you are going to need more storage capacity or functionalities, you would have to make more investments and expenses in resources to achieve it.
However, with a SaaS ERP system like NetSuite, there is no such long-term commitment. Working in the cloud allows companies to expand or reduce capabilities as needed, without interrupting their daily operations.
The ERP SaaS business model enables companies to purchase more storage capacity or environments as their requirements change.
Even if you already have an ERP cloud in place, adjusting the solution is flexible, such as adding an EDI development or integrating it into an eCommerce platform.
Now let’s see an example of flexibility and scalability of an ERP SaaS with a medium-sized company name Camino de Santiago Route Planner. This company implemented its ERP SaaS solution last year and spent several months retiring the systems running production, purchase tracking, and time to switch to the new ERP system. Everything has been great.
Now imagine that this same company announces that it has acquired a company that manufactures Aluminum. As an IT department, it’s understandable that they want this new group to use the ERP system.
If your infrastructure were local (on premise), it would have required an analysis to understand what hardware is necessary for the company to function properly, and possibly, the production environment would have to be stopped for some time.
In contrast, with an ERP SaaS, they can contact their cloud provider and ask for an additional instance or create a new legal entity in their production environment.
Access from anywhere with an Internet connection
If you want to stay competitive in a modern business era, you will need to adapt your processes to these times of digital transformation. Part of this is allowing your employees to work from remote locations. This includes accessing the ERP system to submit quotes, search for available inventory, or enter time and expenses.
With a local ERP, the user would need to be on a private network to be able to access and have a computer with the software installed. This limits the times and places where the user can enter the ERP. The SaaS option, on the other hand, empowers users to get their work done from almost any device with an internet connection.
Let’s say you are a field service technician who has been dispatched to a customer’s facility to evaluate a reported problem. Being only an evaluation, you only bring minimal equipment which does not include your business laptop. After talking with the client, you realize that the problem can be solved with a simple change of parts. Now the customer wants to know the availability of the said product and how fast it can arrive. With an ERP SaaS, you would only have to open a web page on a mobile device, access the system and search the inventory and place the order.
This example is just one of many scenarios that demonstrate how a SaaS ERP can empower your employees to confidently perform their jobs anytime, anywhere. This helps to increase the satisfaction of your clients since they expect quick responses and the ability to have assistance when they need it.
Security as a service
If you’re in the cybersecurity industry, the above benefit of “access from anywhere” may sound more like a threat than a positive. Fortunately, this is something ERP SaaS vendors are aware of. By subscribing to one, you are also acquiring a cloud service that comes with its own security benefits.
Cloud providers serve many customers across a variety of industries, and a breach or attack on hosted data would be very damaging to their business, causing their customers’ trust to be lost and their reputation to decline. This is why vendors invest large amounts of money and resources in hiring cybersecurity experts and advanced tools to constantly monitor.
In addition, ERP SaaS providers have defined practices and responses in case of large-scale attacks, which means that, in the event of a security breach, your company and the provider can respond positively.
Aligned with the following benefit, cloud-based ERP security also comes with an automated patch and update strategy. SaaS providers are rapidly adopting the automatic update method to maintain their ERP products and these automatic enhancements can include security patches to keep up with the latest cybersecurity threats.
It is very common for companies to want new functionalities in their current ERP system, but these improvements take time because “it is not the right time”. However, upgrades are simpler with a SaaS compared to a local one.
With an on-premises ERP system, the enhancements are entirely new implementations, which can take many months and stop production. This is why companies purposely delay them. So they have time to plan and prepare for this great task. Another downside is that occasionally this update also means purchasing more hardware to support it.
With an ERP SaaS, the improvements are carried out regularly by the provider. They generally have an established periodicity, such as a small one every four months and a large one every year.
Customers are free to delay these improvements, but only for a negotiated period of time. This indirectly helps keep license and support prices low for the vendor’s customers.
Another way to understand an ERP SaaS from the consumer perspective is to think about the applications you use on your smartphone. Let’s say you download your NetSuite mobile app or bank’s mobile app. You can perform functions like checking your balance and access your accounts without having complicated financial software installed on your phone.
When your bank has updates for the application, you will be notified of the available update or your application will update automatically (depending on how you have chosen). This update may contain minor bug fixes or massive changes, such as additional functionality.
These automated updates are part of a new software deployment model and are something that SaaS ERP providers offer with their service. Constant updates with the latest functionality, security, and bug fixes will help companies stay on the cutting edge of innovation.
Cost of ownership
Over the last decade, several studies have proven that the total cost of ownership of a cloud-based solution is significantly lower than an on-premises one. This is due to the high cost of acquiring infrastructure, installation and maintenance that is transferred from the company that uses the ERP to the SaaS provider. Another factor that saves money and resources is that SaaS requires minimal internal IT support. With a cloud ERP, the vendor is the one who performs these tasks, as opposed to the local.
In other words, using an ERP SaaS allows you to refocus all your IT staff on other projects, reducing support costs for your system.
Local vs SaaS
As with any ERP selection decision, how you choose to implement your software has a lot to do with your business goals, and nothing to do with marketing gimmicks. NetSuite consultant can help to choose the best ERP and NetSuite developer can help you for NetSuite implementation.
If the benefits described above make sense with your business strategy, then SaaS ERP may be the right decision for your company. However, local ERP remains a popular option that enables innovation for many forward-thinking companies.