ERP-SaaS: Definition, Function and Implementation
ERP-SaaS refers to a cloud-based ERP system. You will learn what distinguishes this in this article.
- What does Software-as-a-Service (SaaS) mean?
- What does Enterprise-Resource-Planning (ERP) mean?
- ERP-SaaS: Definition and operation
- What are the benefits of ERP-SaaS for companies?
- What does a modern ERP-SaaS include?
- What is an ERP-SaaS needed for?
- What is the difference between ERP-SaaS, Cloud-ERP and On-Premise-ERP?
- How is ERP-SaaS implemented?
- What does an ERP-SaaS system cost?
- What are popular ERP systems offered as Software-as-a-Service?
In this post you will learn what SaaS-ERP, a cloud-based ERP system, is all about and how you can implement it.
SaaS-ERP is a type of cloud-based ERP solution. It is provided over the internet from the data center of a provider for customers. SaaS-ERP offers companies numerous advantages such as low costs, an advanced user interface and access to new technologies such as AI and IoT. If you want to know where SaaS-ERP is used, what advantages and disadvantages it brings with it and how you can implement it, you should continue reading now.
What does Software-as-a-Service (SaaS) mean?
To understand what SaaS-ERP is all about, you should look at the two acronyms individually. SaaS stands for Software-as-a-Service - a sub-area of cloud computing. In the SaaS model, both the IT infrastructure and the software are operated by an external provider and used by customers as a service. This allows users to use the software in the cloud without having to license it or acquire the hardware. The service is provided over the Internet, while customers purchase the software for a monthly fee.
What does Enterprise-Resource-Planning (ERP) mean?
Enterprise-Resource-Planning (ERP) refers to a process that companies use to manage key areas of their operations. The ERP system allows users to automate their back-office processes and provides a single source of data from different business areas.
The main functions of ERP solutions include:
- Accounting & Finance
- Procurement
- Project management
- Enterprise Performance Management (EPM)
- Supply Chain Management (SCM)
- Adaptable intelligence
- Predictive Analytics ERP
- Risk management
ERP-SaaS: Definition and operation
SaaS-ERP is a cloud-based ERP solution that is provided as a service over the Internet and is usually sold as a monthly subscription per user. The ERP system is operated on the provider's servers, who usually updates the software quarterly.
SaaS-ERP is often run in a multi-tenant architecture. This means that the data of individual clients is kept separate by the provider - however, the software instance, the database, and the support infrastructure are shared.
A SaaS-ERP system is easy to implement and use, especially since the provider is responsible for the update and maintenance. This increases system security and protects the ERP system from threats and crashes. In addition, IT costs are reduced. The downside is that providers mainly offer standard functions and leave little room for individual adjustments in the SaaS-ERP model.
What are the benefits of ERP-SaaS for companies?
The digital transformation is progressing ever faster. Companies must therefore be able to efficiently use their mass of data. However, this is not possible if your company's data is stored on several different systems, some of which may not be compatible. This is where SaaS-ERP software comes into play, which can serve as a single source for your company data.
Hosting ERP in the cloud has many advantages. So far, the implementation of ERP has been a lengthy and difficult process. Companies were forced to carry out complex data integration and set up an extensive infrastructure. However, the SaaS-ERP implementation is much easier because the platform is hosted by a cloud service provider and provided over the internet. At the same time, SaaS-ERP software improves the speed of data delivery. In addition, SaaS ERP implementation is cheaper than On-Premise ERP, as most IT costs incurred with traditional ERP models are avoided.
Here you can see the advantages and disadvantages of an ERP-SaaS system at a glance:
Advantages of ERP-SaaS | Disadvantages of ERP-SaaS |
+ Lower and easily calculable operating costs | - The costs increase when more users are added |
+ You only pay for the users who need access to the system | - Less customization of the software to individual business processes |
+ More data security and easier repair | - The provider manages everything and makes you dependent on his abilities |
+ Data can be shared more easily | |
+ Great out-of-the-box functionality that already covers various aspects of business operations | |
+ Automated upgrades save time and effort and give users access to the latest features | |
+ The intuitive user interface makes it easier for users to access more system functions | |
+ Quick scalability and flexibility when setting up or deleting users |
What does a modern ERP-SaaS include?
Modern SaaS-ERP systems rely on progressive technologies and automate processes to increase efficiency. This is also underpinned by a 2020 global survey by Oracle and the Enterprise Strategy Group. Here, 91% of the 700 senior executives in finance and operations surveyed said that "SaaS is a gateway to the introduction of new technologies in financial and operational applications." So let's take a look at these technologies:
Internet of Things (IoT)
You can optimize your ERP system with real-time information by streaming IoT data. This can help your company gain more transparency and efficiency by leveraging predictive maintenance, workplace safety, smart manufacturing, and a networked customer experience.
The Oracle survey mentioned above also states that companies can use IoT data to cut their time for production and order fulfillment by more than six business days.
Digital Assistants
With the help of digital assistants, like chatbots, the interaction of the ERP system with many other systems is simplified. They also promote productivity as they support employees and customers in their tasks, deliver faster analyzes, provide direct answers, and give intelligent recommendations. This is also confirmed by the Oracle study, in which the respondents stated that chatbots contribute to a productivity increase of an average of 36%.
Blockchain
If companies strive for secure collaboration with numerous parties, they need a solution that brings all participants together in real time for data exchange. With Blockchain, companies can exchange reliable data in a collaborative framework.
AI
To make better decisions, drive innovation, and automate operations, companies make use of AI integrated into their SaaS ERP applications. Together with machine learning and Robotic Process Automation (RPA), AI helps create tailor-made apps as well as vertical solutions and extensions.
What is an ERP-SaaS needed for?
There are many reasons to use an ERP system. SaaS-ERP systems are often used as an alternative to On-Premise ERP solutions. This is particularly due to the fact that they are cheaper and easier to maintain and can also be linked more easily with other users and systems. Companies also use SaaS-ERP to gain access to advanced technologies, including AI, IoT and Blockchain.
The use cases for SaaS-ERP are extremely diverse. There are ERP systems, for example for IT service providers, Finance, Mechanical engineering and ERP Systems for E-Commerce. SaaS-ERP often serves as the first ERP system for small businesses and Start-ups. This is due to the easy implementation and the low acquisition costs.
SaaS-ERP is also a popular option for restructuring an ERP system or as the second ERP platform of a two-tier ERP system. Many companies also migrate from an obsolete On-Premise ERP system to SaaS-ERP. After all, this is the easiest way for them to get to forward-looking technologies like Big Data or Artificial Intelligence.
What is the difference between ERP-SaaS, Cloud-ERP and On-Premise-ERP?
If your company wants to use ERP, it has to choose between an on-site installed system (On-Premise ERP) and a cloud-based ERP solution. The main difference is that On-Premise solutions are installed locally on your company's servers and then managed by the IT team. Cloud-based ERP solutions, on the other hand, are provided as a service. This is also the reason for the term Software-as-a-Service. The ERP software is managed by the provider in the cloud, while customers access it via browser or app.
On-Premise ERP | Cloud ERP | |
Cost | Low upfront costs and predictable costs over time | The initial costs are significantly higher, but pay off over time |
Security | The provider cares about data security | The user is responsible for security |
Implementation | Usually simple and time-saving implementation | Implementation takes more time, especially when there are many customizations |
Personalization | Offers stability and regular updates of the provider, however few customization options | Numerous customization options |
How is ERP-SaaS implemented?
Since the cloud provider is responsible for the IT infrastructure and users use the software via browser or smartphone app, SaaS-ERP implementation is only a matter of hours or a few days. However, delays may occur if data from an old ERP system needs to be migrated. Of course, you also need to plan time for your employees to deal with the software and get used to the new possibilities. To make matters worse, SaaS-ERP needs to communicate with other SaaS applications or locally installed software.
What does an ERP-SaaS system cost?
As already mentioned, SaaS is based on a subscription model. Therefore, the costs for ERP Software-as-a-Service initially look very low compared to On-Premise ERP – for this a preliminary license is usually required, which can easily amount to several hundred thousand or even several million euros. However, after just a few years and an increase in the number of users, SaaS can overtake the total costs of On-Premise ERP. Since they have to spend less financial resources on upgrades and maintenance with SaaS-ERP, many ERP users see SaaS as a more profitable and reliable solution.
In order to be able to calculate the total operating costs, when buying a SaaS ERP solution you should especially pay attention to the different subscription models. These vary greatly and can include both staggered prices and prices per user. For the cloud infrastructure, for example, separate prices can be called up, which depend on the use.
What are popular ERP systems offered as Software-as-a-Service?
Here is a list of the best ERP systems, which are available as ERP-SaaS software:
SAP S/4HANA Cloud, public edition
weclapp
Oracle Fusion Cloud ERP
Sage 100
Xentral ERP
work4all
proALPHA
tricoma
SAP Business OneAre you looking for more ERP systems? Then you should visit OMR Reviews! Here you will find a selection of the best business tools with real user reviews from our community.
Tim ist ein freiberuflicher Journalist / Content Writer, der OMR Reviews in den Bereichen Marketing und Softwares unterstützt. Seit seinem Onlinejournalismus-Studium schreibt er unter anderem für Computer Bild, XING und Finanzcheck.de. Wenn er nicht gerade am Texten ist, spielt er auf seiner Stratocaster die Klänge von Hendrix, Frusciante und Gilmour nach.
