SaaS vs. Traditional ERP: Five Key Differences



The beauty of modern ERP packages is that you have options to choose from during your ERP software selection. You can either deploy a solution by hosting it internally on your own servers (“traditional ERP”) or perhaps you would rather not deal with the software and have it hosted somewhere else (“Software As A Service” or “SaaS”). As part of your ERP selection process, however, you should be aware of five key variables that will ultimately factor into the decision that is right for you.

1.     Simplicity. In general, SaaS is simpler to deploy from a technical perspective. Because you don’t need to purchase additional servers or physically install the software for yourself, it can be an easy and quick means of deploying the software. On the other hand, the high level of technical ease may create additional business complexities that you may not otherwise experience with traditional ERP (see #2 below).
2.     Flexibility. Because traditional ERP is installed on your servers and you actually own the software, you can do with it as you please. You may decide to customize it, integrate it with other software, etc. Although any ERP software will allow you to configure and set-up the software the way you would like, SaaS is generally less flexible than traditional ERP in that you can’t completely customize or rewrite the software. Conversely, since SaaS can’t be customized, it reduces some of the technical difficulties associated with changing the software.
3.     Control. Because of #2 above, many companies find that they don’t have control over SaaS software as they would like, relative to traditional ERP. This is especially true of mid-size or large companies with well-defined business processes that are not able to be changed to fit the software. Smaller companies generally are able to adapt their business processes to the software easier than a larger organization.
4.     Accessibility. Since SaaS is entirely accessed through the web, you are in a world of hurt of the internet goes down. Alternatively, traditional ERP does not require internet reliability, provided your users are accessing the software from inside your company’s network.
5.     Cost. In general, SaaS can be deployed at a much smaller initial cost, which can be attractive to smaller businesses. However, the ongoing annual payment can be higher for SaaS because you’re paying to use the software. Much like leasing vs. buying a car, that payment never goes away as long as you’re using the software and can become costly as you grow and add employees to the system.

Clearly, there are tradeoffs between the two options. The above five factors should be thoroughly prioritized and evaluated as part of any effective ERP software selection project.

Comments

Post a Comment

Popular posts from this blog

Understanding the Difference Between ERP Systems and Accounting Software

Image
In the dynamic landscape of business management, having the right tools at your disposal is crucial for success. Among these tools, Enterprise Resource Planning (ERP) systems and accounting software play pivotal roles. While these terms are often used interchangeably, they serve distinct purposes in helping businesses manage their operations and finances effectively. In this blog, we will delve into the definitions of ERP systems and accounting software, explore their key differences, and discuss the benefits they offer to businesses.   Defining Accounting Software: Accounting software serves as a fundamental tool for managing financial transactions and generating essential financial reports. It encompasses various functions such as bookkeeping, invoicing, payroll management, accounts payable and receivable, and cash flow management. Advanced accounting solutions also offer features for tax compliance, budgeting, forecasting, auditing, and financial analysis. By automating financia...
Read more

Three Ways to Get More Out of Your Current ERP System

Image
How can a company realize a larger return on investment and business benefits from their investments in their ERP software? This is a topic that most companies enjoy discussing about. Here are three key points: 1. Understand and leverage the functionality you already have.  Many ERP vendors offer a wide array of core functionality, advanced modules, and third-party applications to address the needs of their customer base. So much so, in fact, that many customers don’t fully understand the full breadth of what is right in front of them.  One key lesson for companies is that many broken business processes or perceived weaknesses in the system are often easily addressed by better leveraging functionality that already exists but isn’t necessarily being used by the organization. This can be a more cost effective solution than ripping out and replacing your incumbent ERP software package. 2. It’s never too early or too late to develop your business blueprint. ...
Read more

TOP 15 BENEFITS OF IMPLEMENTING ERP SOFTWARE

Image
There are many advantages to implementing an Enterprise Resource Planning (ERP) software solution. Among countless other advantages, implementing  ERP software  can improve productivity, increase efficiencies, decrease costs and streamline processes. Let’s look at 15 of the most common benefits of an ERP system that companies have reported after implementation. ERP implementation is broken up into three phases: discovery, implementation, and results. In the initial phase, we install the software, build a prototype, and train your staff. Then we test the ERP system, create reporting templates, and run more targeted training sessions. Finally, we finalize the model of your ERP system, conduct readiness assessments, and go live. Workwise provides expert level software implementation, which is the process of placing sub-systems into your main ERP system and ensuring that they all are able to function together as one seamless system. Taking knowledge ...
Read more