SAAS, is the form of licensing where the user pays for access to the software on a monthly, quarterly or annual basis, usually with a contract lasting between one and three years. The user company never owns the license, and loses access to the software if they do not renew the contract. Advantages include not needing a server on-premise, software/system maintenance and version upgrades included in the monthly cost, and ease of access from multiple locations. There has been steady growth in the percentage of ERP systems deployed as SAAS over the past several years. A good resource for data on this trend is financesonline.com. Their analysis shows the adoption rate of ERP in the public cloud in 2020/2021 as 16%. I suspect the percentage of new ERP systems licensed as SAAS is much higher. What are the factors that should be considered by a small or midsized company when deciding on SAAS versus traditional licensing;?
Do you have a fast and reliable internet connection? Most companies can probably answer yes to this, but be aware that with SAAS, if your internet goes down, so does your ERP system. Redundant internet connections can reduce the risk of disruptions. I have seen data suggesting that you should plan for 2 MBPS of download and .5 MBPS upload for each concurrent user. This is in addition to any other bandwidth requirements for the business.
Do the requirements of your business allow, and are you willing to adopt an ERP system with minimal customization? SAAS ERPs support customizations to varying degrees. One of the biggest advantages of SAAS is that software upgrades are automatic, often scheduled to be deployed on short notice, and customizations can break when upgraded.
Do you trust your software developer to have total control over your ERP system? ERP is used to manage critical business processes and data from sales to purchasing, inventory, production and finance. Losing access to ERP functions will be catastrophic to any business.
Does the SAAS contract you are considering give you ownership of your data? In other words, if you decide not to renew, will you be able to take possession of your data so it can be loaded into another system, at a reasonable cost?
If the answer is yes to the above questions, you should seriously consider SAAS as an option. Also, be aware that there are hybrid cloud options for deploying ERP. For instance, you can deploy traditionally licensed Epicor ERP in the Microsoft Azure cloud, providing many of the benefits of SAAS while retaining full control of your system.
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