There is currently a debate on the ITToolbox site about whether ‘proper’ ERP is available as a Software-as-a-Service (SaaS) offering – Does SaaS ERP really exist?
I don’t believe the debate has been resolved either way, but I found some comments interesting:
“Perhaps there are some ERP vendors that have made the leap to true SaaS, but, keep in mind, in the long run, you will pay more money for a SaaS model. Typical payback times are between 2-2.5 years to where it becomes more expensive to operate with the monthly fees (you never “own” the license), vs. paying up front for a perpetual license. Due to the strategic nature of an ERP investment that may not be changed out for 10+ years, the SaaS model typically does not make much financial sense.”
“One major TCO benefit surfaced right to the top in favor of SaaS. We call it the “Six Year Pinch”. We all agree that the payback for on-premise is within the five year time frame; however, growing enterprises require upgrades to the on-premise applications, infrastructure, and personnel (new hires and training). When you factor these costs into the TCO model, the on-premise ERP became 3x more expensive than the SaaS ERP since the investment for SaaS remained linear whereas the on-premise had a investment requirement every 5 to 6 years. True SaaS ERP vendors have one code base (i.e you are always on the latest and greatest version of software). The SaaS vendor manages the deployments behind the scenes and the customer is responsible for enabling new functionality through switches as necessary. On another note, the companies we interviewed who are using SaaS ERP chose the solution not because it is a SaaS solution, but chose it because the functionality met their requirements – the most important decision in any business system selection. The SaaS model was a secondary benefit.”
