With the rapid improvement in Internet capabilities, new enterprise resource planning (ERP} deployment models have become viable. Today, you have your choice of keeping your ERP on-premises, moving to a cloud-based system, or implementing a hybrid model. In fact, cloud ERP is not only viable, it has become the preferred deployment option for many best-in-class organizations.
Knowing what is most important to you in your ERP system will help determine the best deployment option. Not surprisingly, organizations choose their ERP primarily based on three things: functionality, ease-of-use, and total cost of ownership. Best-in-class organizations also consider the ability to tailor functionality without programming, integration of suites, and the quality and availability of support. While the deployment model has not been a key criteria in the past, that is changing.
How Deployment Impacts Your ERP System
Let’s look at the differences between the three primary ERP deployment models that you can consider in your ERP system.
On-premises: Traditional ERP implementation is with software on servers that are located and managed in-house. The ERP software is managed by the in-house IT team who are responsible for customization, application upgrades and maintenance. However, these software functions are often outsourced to the ERP vendor.
Cloud based: Cloud ERP implementation is one in which software is delivered via the Internet. Software and servers are located elsewhere—they can be hosted by the ERP vendor, a third party or by the company itself. In this implementation, companies can choose how much control they want over their software and technology environment.
In very simple terms, cloud computing delivers cloud applications in the same way that a power grid delivers electricity. It offers the advantage of delivering technology without the company needing an IT department or server infrastructure.
Software as a Service (SaaS): SaaS ERP implementation is a subset of the cloud deployment model. In this situation, the cloud software and servers are hosted by the ERP vendor. All software maintenance and upgrades are performed by the vendor as a part of the service. Pricing is usually a set fee per user, per month.
By delivering computing, storage and cloud applications as a service, not a product, the cloud offers both a cost and business advantage. SaaS increases computing capabilities without having to provide a new technology infrastructure. Users interface with the cloud applications eliminates the need for installing numerous software applications on the desktop.
SaaS ERP Deployments Models Are Growing Rapidly
Many businesses are moving away from traditional licensed ERP on-premises to a cloud ERP. According to Aberdeen Group, in 2012, 77% of mid-sized businesses deployed their ERP on-premises, with the remainder in some type of cloud software including SaaS, or hosted by the vendor or other third party. But as more companies look to upgrade their ERP system, they are also looking to change their deployment. The biggest changes have been in small organizations (<$50mm in annual revenue). Here, there was a 53% increase in the adoption of SaaS in just one year.
Aberdeen Group also found that best-in-class organizations are over twice as likely as other companies to have a multi-tiered ERP strategy. These companies choose the deployment method that fits best depending upon the functionality required at different locations. Often, there is one type of deployment for the corporate offices and another for business units. When growing companies need to implement an ERP in a new business location, the fastest and most cost-effective means to do that is often through the cloud.
To read more about the Aberdeen Group study, download our free whitepaper, “SaaS and Cloud ERP Observations: Is Cloud ERP Right for You?”
PositiveVision can assist you in implementing the ERP deployment model that works best for your company. With our Sage 300 software, we offer both on-premises and cloud-based platforms. Contact us if you would like help determining the best deployment options for your ERP system.