The traditional belief that a comprehensive business solution like an ERP system needs to be running inside the organizations' walls to be effective is becoming a thing of the past.
During the last couple of years, the software-as-a-service (SaaS) model has been gaining momentum with small and medium-sized companies. Saas, where the solution is managed by the provider and the user accesses it over the Internet, is ideal for businesses unable to commit considerable IT resources to a project.
SaaS offerings have typically targeted very specific business functions. For instance, one of the most well-known SaaS providers, Salesforce.com, offers web-based sales, marketing and customer service solutions.
Convincing businesses to implement an SaaS solution to manage their entire financial system has been a little harder to do. Understandably there is some reluctance among the business community to allowing their financial information to be managed off site.
However, SaaS ERP systems are starting to become more common. For example, software giant SAP announced an SaaS ERP system, Business ByDesign, at a conference last year. In the seven months since announcing the solution, the company has gained 40 pilot customers and 20 live customers.
Unfortunately, things are not perfect for SAP. Citing a series of performance setbacks and technology bugs, SAP recently announced it would delay the release of Business ByDesign for at least another 12 to 18 months.
While it’s possible to view SAP's actions as rethinking the notion of SaaS ERP, others see no stop for the impending SaaS train. According to a recent article published on DestinationCRM.com, SaaS will be a $30 billion industry by 2013.
As businesses continue to look for ways to reduce costs and as solution providers continue enhancing the functionality of on-demand software, more and more organizations will choose less-expensive SaaS ERP systems over their installed counterparts. When and if SaaS ERP will ever overtake installed solutions is an entirely different story.
Be sure to check out some of the following articles on SaaS ERP around the Web:
