A comprehensive overview of ERP systems, along with their main features. ✓SaaS ERP and custom solutions comparison: learn what's best for your business.
SaaS ERP Systems Explained. What Is Best for Your Business?
What is SaaS ERP? To answer this question, let's have a look at the terminology. An ERP system is primarily a tool for improving enterprise management's efficiency and quality. It enables users to make strategic and tactical decisions based on automated processing of up-to-date and reliable information. At the same time, an ERP system is not only a tool for business but also its maintenance technology.
There are different models and solutions for your company's ERP system implementation. Out-of-box products offer ready and simple solutions for an immediate start; they come with a lower initial budget due to the SaaS model. A cloud ERP is one of the most popular types of ready products. They come in handy for new small companies and startups as a temporary solution for an ERP system. On the other hand, many companies require custom solutions designed to solve business-specific problems and perform unique tasks.
This article covers the SaaS model’s key features, application differences, and strong and weak sides.
Table of contents
Goals ERP Systems Help to Achieve
When Does It Make Sense to Develop Your Own Solution?
What Is a SaaS ERP System?
An enterprise resource planning system (ERP) is a software package that consists of integrated applications designed to manage day-to-day business processes within an organization. The system's functionality covers a wide range of the company's internal processes: production, distribution, sales, accounting, and personnel management.
The ERP system allows you to standardize the working process, facilitates cooperation and data exchange between departments, and provides the company management with centralized access to any necessary information for easy and effective decision-making.
- 67% of manufacturers and distributors in the Mint Jutras 2019 survey rated their ERP implementations as successful/ very successful.
- 49% of companies in the 2018 Panorama Consulting Solutions report stated that ERP implementation improved all their business processes.
Software as a service (SaaS) is a model of providing software licensing with a subscription. SaaS applications are often cloud-based - they run on a SaaS provider server, and users access them through an Internet browser. The vendor is responsible for the software functioning, updates, and technical support for the users.
In other words, the SaaS model provides an out-of-the-box software package, and you pay your cloud service provider as you use it. All basic infrastructure, mid-layer software, application software, and application data are stored in the vendor's data center. The service provider manages hardware and software according to the service agreement and ensures applications’ data availability and security. The ready-to-use packages have the most common functionality, but there are limited options for further improvements.
Goals ERP Systems Help to Achieve
The main goal of any ERP system implementation is to optimize the company's expenses and resources. It includes many objectives: common space creation, better department interaction, data exchange customization, easy information access, etc.
1. Automate Business Processes
Customer relations, HR, or financial management - ERP allows you to autopilot all the processes. It helps monitor remote departments and employees and integrates tasks across departments.
2. Make Data-driven Decisions
The ERP system helps you make balanced decisions faster. It offers real-time data for analysis in management, accounting, and marketing. It creates a company-wide information environment and optimizes data access speed.
3. Improve Collaboration
ERP systems ensure prompt and effortless communication between employees and departments. In contrast to using separate databases for each department, constant access to all company data enables employees to collaborate more effectively.
The ERP system implementation also introduces many tools your company may need in the future. Often, companies use only a fraction of all the system's capabilities. However, as the company grows and develops, you can purchase new modules, introduce new solutions, and connect new company divisions.
Main Features of SaaS ERP Systems
Many businesses consider SaaS-based ERP systems an easy and rapid solution. We can sum up the main features characterizing this type of ERP systems as follows.
- The application is designed for remote use. It works well for remote employees and departments and enables executives to monitor overall workflow.
- Payment is charged as a monthly subscription fee or based on the transactions' volume.
- The payment includes the application technical support.
- The application upgrades are seamless and transparent to customers.
In other words, customers don't pay to own the software as such, but rather rent it and use it via the Web-interface. This way, unlike the classic licensing scheme, the customer has relatively low recurring costs and doesn't need to invest significant funds into purchasing the software and hardware platform, deploying the system, or maintaining its operational capability. The customer can also halt the payments if there's temporarily no need to use the software.
SaaS ERP Model: Strong and Weak Points
Like any other solution, the SaaS ERP model has its advantages and downsides. SaaS models can be a perfect way to introduce an ERP system to your employees and refine the company's needs in terms of workflow management.
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SaaS ERP Strong Sides
The Saas ERP model boasts the following advantages:
- Plenty of out-of-the-box solutions. These ready-to-use products don't require any modification or configuration. They are fast and convenient.
- Low initial budget. There are no extra costs for development, implementation, or hardware. You can choose the solution that best fits your monthly or yearly budget according to a subscription fee.
- No developer team is required. You don't have to hire and keep your own IT team, as you get a ready-to-use solution and get full tech support and product maintenance.
- Improved mobility. Cloud-based systems are easy to use on mobile derives. It's crucial for remote employees or employees that are constantly in motion.
SaaS ERP Weak Sides
The potential downsides for a business may be as follows:
- Less flexibility. In many cases, out-of-the-box solutions are too general and universal. Some system features may be crucial for overall performance but are not optimized for your company's needs. You may need to redesign some aspects of the system's functionality. It leads to extra costs and complications.
- Long-run expenses. It isn't easy to adapt out-of-the-box solutions to specific business processes. There are certain possibilities for further improvements, but they require extra time and budget. Often, such software lacks specific features vital for your business. It results in constant time and financial expenses if there's no option for a final solution to these problems. Besides, subscription costs add up with the time as the company grows and creates more data.
- No extra features. An out-of-the-box solution is a solid option for standard functionality. However, if your company runs very business-specific, non-standard daily tasks, you may have to look for other, niche-oriented options. And this also doesn't guarantee a perfect match for your company's smooth workflow.
- Security issues. Vendors are responsible for data security. It may be problematic for companies with strict compliance and regulatory standards as they have a standard approach to any data processed by their software. This point is crucial in the case of sensitive data.
You should always keep in mind that this model is a ready product that targets universal tasks and may not be optimized to solve highly-specific problems. Before deciding on the solution best for your company, you should carefully consider every offer's strong and weak sides.
When Does It Make Sense to Develop Your Own Solution?
Most SaaS ERP vendors offer ready-made software with the most popular functionality. It's a convenient option for small enterprises, startups, or business owners who only get familiar with ERP systems. This universal feature set meets an average company's needs. However, as the company grows and employees can articulate their specific problems more clearly, most companies need more elaborate tools to help their employees perform business-specific tasks.
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Points to Consider
Here are some points that may indicate it’s time to develop a SaaS ERP solution:
- Your employees and executives are no longer satisfied with the usability or stability
- You want to automate more business activities
- You need advanced analytics and more insights from your company data
- Your company is growing rapidly and globally
- You deal with new compliance requirements
In reality, most companies eventually transition to custom ERP systems. Often, it happens after trying several ready-made options. An enterprise's growth and development always bring a better outline of which features your company needs to organize its resource planning system.
Custom vs. SaaS ERP
SaaS ERP systems provide standard functionality. At first, there are many functions (sometimes too many), and you may end up not using some of them and lacking the ones that are vital for your business. Some cloud-based ERP solutions allow a decent level of customizability, which implies further development possibilities. However, at first, you'll have to adjust your company's needs to the system's functionality but not the other way around. Once your company has grown to have unique business processes, you, most likely, will need alternative solutions facilitating your company's particular needs and ready to solve specific problems.
Implementation and Upgrades
- SaaS ERP. You can start right after the purchase. The system is updated automatically when online and manually when offline.
- Custom ERP. Developers will present your custom solution upon the agreed deadline. The system will focus on the company's strategic development plans and specific tasks. You can start with a small set of critical features and expand the system while it is already in use.
Third-party Software Integration
- SaaS ERP. SaaS products offer basic integration with third-party software. However, they cannot guarantee a flawless work process with software particularly required for your company.
- Custom ERP. The custom ERP developers can integrate your resource planning system with any software you need to organize your workflow.
The right choice of EPR services is a crucial step. Ideally, a trusted company not only delivers your product but rather becomes your company's long-term partner providing the system's support and further development.
Why Choose Exceed Team for ERP Development?
Our customers value Exceed Team for several reasons:
- Project-by-project approach: We base the final product' feature set on analyzing your company's daily tasks and specific problems.
- Experience and expertise: Our professionals' team has years of experience working with ERP projects and business-specific objectives.
- Flexibility: We provide tech support and are ready to add new functionality if your company requires it in the future.
- Transparency: We provide detailed reports at every development stage. You will be able to change the project’s course and priorities during any stage of development.
- Security: Your data is our priority, and we operate the latest data security practices, regulations, and compliance.
The ERP system is a powerful instrument that’s strategically important for the company's management process. It optimizes and automates all the company's activity and ensures data flow between departments. Such software covers all business activities within the company - project management, accounting, risk management and compliance, supply chain operations, and procurement. Today's market offers various models of ERP systems implementation.
Small businesses tend to choose ready SaaS ERP solutions, as they are time- and cost-effective. However, SaaS enterprise resource planning solutions may lack flexibility and some vital business-specific features. At a certain point of the company growth, enterprises look for custom-developed ERP systems designed to address their particular tasks and fit their overall needs.
Cloud ERP system or custom-developed software - choosing a final solution is always a challenging task affecting the company's future. The decision depends on many factors - from the enterprise's internal readiness to re-engineer business processes to the price and time of the ERP system implementation.
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SaaS ERP Systems: FAQ
How Does the SaaS ERP System Benefit Small Businesses?
SaaS ERP systems are usually ready-to-use, out-of-the-box products with standard functionality. It's a good solution for a growing company, as it has low initial costs and an effortless implementation process. The company doesn't need its IT team as the solution's vendor maintains the system's functionality. A cloud-based ERP for small businesses is one of the most popular products of this type.
What Are SaaS ERP Pros and Cons?
- A significantly lower initial budget
- Plenty of ready standard solutions suitable for different businesses
- No need for an in-house tech team
- Higher costs in the long-run
- Limited flexibility
- Lack of company-specific features
How Long Does the SaaS ERP Implementation Process Take?
SaaS ERP solutions are a good fit for small and new companies, as they are ready for use immediately after purchasing the subscription. They require no extra hardware or deployment. Cloud ERP solutions are considered the fastest and most convenient option.
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