What is SaaS ERP?

If you are looking for a modern and agile way to run your business, you might have heard of SaaS ERP. But what exactly is it, and how can it benefit your organization?

SaaS stands for Software as a Service. It is a cloud-based delivery model that gives you access to your applications over the internet. SaaS ERP then is short for Software as a Service Enterprise Resource Planning which allows you to access your ERP system over the internet, without installing or maintaining any software or hardware on your premises.

SaaS ERP offers many advantages over traditional ERP systems, such as lower upfront costs, faster deployment, greater scalability and enhanced security. With SaaS ERP, businesses can focus on your core business functions, while your vendor takes care of the technical aspects of your system.

In this article, we explain the fundamentals of SaaS ERP, including its features, benefits, challenges and best practices. Whether your business is considering switching to SaaS ERP or wants to optimize its existing system, this guide will help you make informed decisions and achieve your business goals.

In this Article:

• What is SaaS ERP vs. Traditional ERP?
• What are the Benefits of SaaS ERP?
• What is the Process for Implementing SaaS ERP?
• Which Industries Can Benefit from SaaS ERP?
• What Factors Should Businesses Consider When Choosing a SaaS ERP Solution?

A traditional ERP is an enterprise resource planning system installed locally on a company's servers and IT infrastructure. Traditional ERP can refer to both on-premises ERP and hosted ERP, the two primary deployment options for traditional ERP systems.

Traditional ERP systems integrate and automate various business functions, such as accounting, inventory, production, sales, human resources and more. However, they also have some drawbacks, such as high upfront costs, complex maintenance, limited scalability and security risks.

SaaS ERP, often referred to as cloud ERP,  is hosted, maintained and secured in the ERP vendor's data center, unlike traditional on-premises ERP systems that reside within an organization's servers and infrastructure. Users access the ERP software over the internet, eliminating the need for extensive hardware investments and complex installations. With regular backups and redundancy, downtime is minimized, ensuring uninterrupted operations. 

The SaaS ERP model was created to provide significant advantages over traditional, on-premises ERP solutions. These advantages include a range of modern business benefits, such as:

1. Cost Savings: Organizations using SaaS ERP benefit from a subscription-based model. They avoid the upfront costs of purchasing and maintaining hardware, servers and infrastructure. The predictable monthly fees align with operational budgets. On-premises solutions require an initial capital investment for servers, licenses and ongoing maintenance. These costs can be substantial, especially for small and medium-sized businesses.
2. Rapid Implementation: Implementing SaaS ERP is faster. Organizations can start using the system promptly after subscribing. The cloud-based deployment eliminates lengthy installation and configuration processes. Traditional ERP deployments often take months or even years due to customization, data migration and testing.
3. Accessibility and Mobility: Users can access SaaS ERP from any device with an internet connection. This flexibility promotes collaboration and empowers remote workers. With on-premises solutions, success is limited to the organization’s premises, potentially hindering productivity for remote or traveling employees.
4. Automatic Updates: SaaS ERP providers handle system updates, ensuring organizations always use the latest features, security patches and enhancements, while on-premises ERP users must manage updates themselves, which can be time-consuming and resource-intensive.
5. Scalability: For SaaS ERP users, scalability is seamless. Whether there are ten users or a thousand, the system adapts without major disruptions. To scale up requires additional hardware and infrastructure investments for on-premises users.
6. Security and Reliability: Reputable SaaS ERP providers offer robust security measures, data encryption and regular backups. Downtime is minimized. For on-premises ERP users, security depends on the organization’s internal practices and infrastructure. Downtime risks exist during maintenance or hardware failures.

SaaS ERP provides agility, cost-effectiveness and accessibility, making it an attractive choice for modern organizations. However, each business should evaluate its unique needs and consider data sensitivity, compliance and customization before choosing between SaaS and on-premises ERP solutions.

A SaaS ERP implementation is a process of deploying an ERP system hosted in the cloud and accessed via the Internet. Implementing SaaS ERP for business involves several crucial steps. Here is a concise overview of the process:

1. Needs Assessment and Planning: Begin by assessing the organization’s needs, existing processes and scalability requirements. Understand what functionalities are essential for their business operations. As part of the assessment, create a roadmap that outlines the implementation process, including timelines, milestones and key stakeholders.
2. Vendor Selection: Research and select a reputable SaaS ERP provider. Consider factors such as functionality, security, scalability, customer support and pricing. It’s important also to evaluate how well the chosen solution aligns with their business goals and processes.
3. Data Migration and Integration: Prepare their existing data for migration to the SaaS ERP system to ensure data integrity and consistency. SaaS ERP enables in-app integrations by allowing users to connect their ERP system with other cloud-based or on-premises applications using application programming interfaces.
4. User Training and Change Management: Provide comprehensive training sessions to train end-users on the new system and ensure they understand how to use the software effectively. Communicate the benefits of the SaaS ERP and involve key stakeholders to address any resistance to change.
5. Testing and Quality Assurance: Conduct thorough testing to verify that the SaaS ERP functions correctly by testing various scenarios, including data entry, reporting and workflows. Address any issues or bugs promptly to ensure a smooth transition.
6. Go-Live and Post-Implementation Support: Once the SaaS ERP system is launched across the organization, it's important to monitor its performance closely during the initial weeks. It is also important to provide ongoing support to users, addressing any questions or challenges they encounter.
7. Continuous Improvement: Review the system’s performance regularly, gather feedback from users and leverage analytics and performance metrics to continually optimize processes.

SaaS ERP can benefit any industry or business that needs a comprehensive and integrated solution for managing their business processes, but it is especially suitable for:

• Small and medium-sized businesses (SMBs): SaaS ERP is ideal for SMBs, as it offers a low-cost, easy-to-use and scalable solution that can help improve efficiency, productivity and profitability without requiring a large investment or a dedicated IT team.
• Startups and growing businesses: SaaS ERP is perfect for startups and growing businesses, as it provides a flexible, agile and innovative solution that can help companies adapt to the changing market conditions and customer expectations without compromising quality or performance.
• Global organizations with multiple locations: SaaS ERP is optimal for global organizations with multiple locations, as it provides a centralized, consistent and standardized solution that can help manage and coordinate their business processes across different regions, countries and cultures without losing their visibility or control.

From an industry perspective, consulting firms can leverage SaaS ERP to enhance project management, optimize resource allocation and improve client engagement strategies. Construction companies can benefit from SaaS ERP by streamlining project scheduling, cost tracking and compliance management.

For government contractors, SaaS ERP is instrumental in navigating complex regulatory requirements, managing contracts and ensuring accurate financial reporting. These systems provide a robust framework for managing the intricate workflows and documentation inherent to these sectors.

Any industry or business that relies on efficient resource planning, data management and process optimization can benefit from implementing SaaS ERP.

SaaS ERP is a powerful and versatile software solution that can help businesses achieve their goals and objectives, but it is not a one-size-fits-all. There are many factors and criteria that businesses should consider when choosing a SaaS ERP solution, such as:

• Vendor reputation and reliability: SaaS ERP is a long-term and strategic partnership between the business and the vendor, so it is important to choose a vendor that has a proven track record, a solid reputation and a high level of customer satisfaction and support. The vendor should also have a clear and transparent service level agreement (SLA), which defines the terms and conditions of the service, such as the software's availability, performance, security, backup and recovery.
• Pricing and licensing models: SaaS ERP has a flexible and predictable pricing model, but it can vary depending on the vendor, the features, the usage and the contract duration. Businesses should compare and evaluate the different pricing and licensing options the vendor offers and choose the one that best suits their budget, needs and expectations.
• Scalability and future growth: SaaS ERP can easily scale up or down as the business grows or changes, but it is important to choose a vendor that can support and accommodate the business's current and future needs and demands without compromising the software's quality or functionality. The vendor should also be able to provide new and advanced features and capabilities and integrate with other emerging technologies, such as artificial intelligence, machine learning and more, that can enhance and improve the SaaS ERP solution.

SaaS ERP represents a paradigm shift in how businesses approach enterprise resource planning. Its agility, cost-effectiveness and scalability make it attractive for organizations seeking modern solutions. As technology evolves, SaaS ERP will continue to shape the future of efficient and streamlined operations.

Successful SaaS ERP implementation requires collaboration, clear communication and a commitment to ongoing improvement. By following these steps, businesses can harness the benefits of modern ERP technology.