Addressing the Top SaaS ERP Concerns
What Is SaaS?
Software as a Service (SaaS) is simply the technical term for software, or applications, hosted in the Cloud. Instead of you paying a one-time fee to buy a piece of software to run on your own systems, that software is offered as a service by a provider. You can then access your software for as long as you pay the subscription fee through a browser on any device with an internet connection; desktop, tablet or smartphone.
ERP provided through the SaaS model is a relatively recent emergence and one of the last enterprise software systems to start the migrations; Accounting, Human Resource Management and CRM programs have all preceded ERP’s move to SaaS. Never the less, more and more businesses have begun hosting their enterprise resource planning software over the web, storing and managing their key data on product, manufacturing, inventory and more through the cloud. Well-esteemed on premise vendors like SAP and Epicor have begun offering cloud options, while other companies, like Plex Systems, exclusively offer their services through the cloud so that they can focus their efforts on the increasingly popular option. SaaS ERP is a particularly attractive solution for small to midsize businesses who would not otherwise have the space, employees or investment dollars available to host a costly system on-site. So what do you need to know about the world of SaaS ERP?
Common SaaS ERP Concerns Busted
Maybe you’re just being introduced to SaaS ERP and all of the risks and rewards that cloud-based enterprise software entails. Maybe you’ve heard all about it and been preached to over and over again by loyal cloud devotees. You might be holding back because you’ve also heard enough about the drawbacks that come with SaaS models. However, as more and more industries and users switch to the cloud, those concerns are quickly being addressed by cloud providers who spend huge amounts of resources to strengthen their systems and provide cost-effective solutions because for them, obviously, more people in the cloud means more customers. These days, those often-repeated flaws of SaaS ERP systems often don’t hold up to inspection. Here are some of the most frequent concerns and hesitations from companies who don’t yet want to make the commitment to moving their ERP software to the cloud.
Vulnerability and Security
- It’s probably the definitive hot-button issue when it comes to discussing technology in the cloud. When you don’t store your critical data and ERP processes on-site, how can you trust that it’s secure? There have been a lot of serious security breaches in the news recently, and because it seems like it would the weakest point of a company’s defenses the cloud will shoulder the misattributed blame. In fact, very few of the most publicized security breaches have happened within the cloud—think Target and their Point of Sale system breach. Customer’s information in that case was stored in the company’s own PoS, not in the cloud.
- The fact is that the cloud, and its tough security measures, are SaaS provider’s business model; a security breach on their cloud servers would be devastating to their business: there would be down time, maintenance costs, terrible publicity and the loss of both current and future clients. You can imagine how much time, manpower and investment they put into storing your data—now how much of those resources do you have to dedicate yourself to the security of an on premise system? For this reason, cloud providers will often allow more security for your data than you would be able to provide yourself because they operate their hosting on a large scale for all of their customer’s.
- Think about it; most people will trust a secure internet connection when they email personal information or put their credit card into an online store. The ‘cloud’ has accumulated a largely undeserved reputation as easily penetrable and poorly secured, but that perception could not be more wrong. Cloud providers spend huge portions of their resources on security, because they know it is important for their customers and it is a crucial factor in getting them to re-subscribe to their SaaS ERP every time.
Higher Total Cost of Ownership (TCO)
- One of the most common reservations that companies have about committing to a SaaS ERP system is the subscription-based pricing model, as opposed to the one-time per user ownership fee that on premise systems require. Legacy ERP vendors will liken the difference to the ‘rent or own model’—assuring you that in as little as three years you’re going to be paying more in total for the cloud ERP than you would’ve if you’d just gone with on-prem. What those naysayers fail to account for is all of the correlated costs that come with site deployment.
- You don’t have to hire more IT people, dedicate resources to training existing team members or invest the middleware and hardware required to host and run that ERP on-site.
- What’s more—things that will often be bundled into the subscription cost of your software; system customizations and routine maintenance and upgrades, for example, won’t be included in your up-front fee for on-premise ERP. Instead, those costs get billed as they need to happen. And you know that when it comes to enterprise software, maintenance and upgrading are not quick, one-time operations. They are routine, and you will be routinely billed. A lot of the time, a more in-depth cost analysis reveals that because of the hidden fees associated with on-prem deployments, SaaS stays cost effective for a much longer time.
More Downtime with SaaS ERP
- Much like their security systems, cloud hosting services leverage economies of scale so that they are able to provide everything you look for in an on premise system in their SaaS ERP offerings. The same goes for connectivity capability. Those thinking about moving to the cloud will naturally be concerned about the ‘Web’ part of web-based ERP. What if the connection goes down, or the provider has down-time on their end? For a business-crucial piece of software like ERP, every minute of downtime on the system can have huge and magnifying costs.
- However, because connectivity is such a huge part of customer satisfaction for SaaS ERP providers, they naturally make it a priority. Cloud-exclusive vendor Plex Systems reported a 99.9% up-time for the past year. That’s more than even most on-premise instances can manage due to routine maintenance and upgrading times.
SaaS ERP providers stake their business on making the cloud an attractive option for you—they have naturally made some great strides in addressing common client concerns about the cloud, including downtime, security and TCO worries. Because the big vendors invest all of their resources in providing ERP systems for many clients at the same time, they are able to utilize economies of scale to deliver all the features you need; data storage, analysis, quality control and more, much more cost-effectively than you taking on the burden of all of those tasks yourself with an on-premise deployment.
Of course, just as the cloud is an attractive option for many businesses, there may be specific reasons why SaaS ERP is not right for your business—read more here for the factors that may make you hold back from a web deployment. If you need more information on different hosting options for your ERP software, or want to move to a different instance, contact an expert at Datix today.