In a recent survey by Unit 4 Business Software in partnership with ITWeb, the majority of respondents (70%) indicated their organisation does not use ERP software through SaaS, and is not considering moving their ERP to SaaS.
"There are many core benefits of cloud computing as well as ERP. Cloud solutions have very little capital layout. Subscription based offerings almost always include the software, licences, hardware and other peripherals. The only investment in this case would be the services," says Christo Erasmus, of Unit4 Business Software, commenting on the results of the ITWeb/Unit 4 Business Software SaaS survey, which ran online during July 2015.
Erasmus explains that cloud solutions are normally cheaper as vendors are able to aggregate volumes, which enables the subscriber to have no need for internal IT resources.
He believes flexibility is also part of the cloud offering, which normally offers a variety of configuration options which allow users to pay for only what they use.
"There is a huge reduction in risk. Technology used in cloud solutions must stay up to date and in line with the newest trends and features. There is no need to 'rip-and-replace'. Security is a concern that has plagued SaaS for a long time, and has received a lot of attention with the addition of new technologies, features and controls therefore it has probably become better than the security currently in place at the physical on-site environments. All these benefits apply using an ERP through SaaS, but what may not be evident from the start are the opportunities that present themselves," says Erasmus.
He says cloud brings the younger generation of the workforce into easy and direct contact with the operational engines of the business.
"This will also ensure that mobile or distributed workforces have access to up-to-date information through whatever device is at their disposal. Couple this with social and business networks like LinkedIn, and you immediately expand the wealth of data at your fingertips, providing you with an immediate competitive advantage."
With regard to the finding that 70% of respondents are not considering moving their ERP to the cloud, Erasmus says: "The most obvious benefit of moving your ERP to the cloud could is the significant cost savings associated with it. Most companies have spent a fortune on implementing and customising their ERP systems and fear the cost and disruption of a move to the cloud or even another system may have. The bottom line is that ERP vendors must stay fresh and flexible and they must offer a clear and relatively easy move the cloud."
He advises that the return on investment of such a move to the cloud should be almost immediate.
"Many companies have reached a stagnant point in their operational system purely based on the cost of expansion and implementation of new functionality. In some cases, the upgrade costs of the existing ERP will be more than the actual implementation of another ERP application with more modern functionality solely based on the upgrade of customisations and localisations," Erasmus adds.
Keeping it local
It's not surprising that the overwhelming majority respondents (80%) indicated they are likely to locate their data within South Africa. The United Kingdom came in second at 3%, followed by the USA at 2%.
"The standard arguments for hosting within South Africa are faster Web access [and] better local/technical support and access to data should the international links be down. The fact is that the speed of access relies not just on the country in which it is hosted but also the resources dedicated to that data. In today's connected world, technical support can often be obtained through Skype and other similar applications for cheaper than local on-site support offerings," Erasmus advises.
He also believes that if an organisation is multi-national and concerned about access when lines are down, it must be taken into account that South Africa only accounts for approximately 1% of the worlds' internet users.
"Obviously, if all operations of a company are within the borders of South Africa, it probably makes more sense to keep everything local," he adds.
65% of respondents believe it is important for their SaaS ERP applications to be integrated into social media.
"Online social networks, with their collaboration and networking capabilities, have emerged as very strong and vibrant role players in modern business operations, especially towards customer relationship management and sales."
According to Erasmus, the next natural step for any organisation would be to integrate their operational system with these role-players to gain an even better grasp on their industry and stakeholders.
"It is not just a case of embedding the Facebook logo, but extends into the effective and seamless interaction with staff, customer, suppliers etc. through all available collaboration platforms," he adds.
When asked what the biggest technical concern with SaaS is, 67% of respondents cited security, application uptime ranked the second highest at 55%, and functionality came in third at 47%.
"The main reason that companies are concerned with security is because there is a lack of control and visibility into how their data is stored and secured by SaaS vendors. Fears about insider breaches and vulnerabilities in the application and the availability of the system also ranks high in the dissuasion to move to SaaS," says Erasmus.
However, he does believe SaaS vendors are investing heavily into the engineering and deployment of secure applications and there are regular audits into the security of their applications.
"These audits help to identify security issues up-front. It is always good to have external third party validations performed. These practices will also provide better information during the sales cycles and allow the potential customer to gain assurance of the security of their data. The adoption of SaaS security strategies and regular SaaS security assessments can enable SaaS vendors to boost customer confidence in their solution and enable faster, wider adoption."
Guaranteed portability without recording of SaaS applications rated very high in the survey at 72% when respondents were asked if this would influence their choice of system.
Erasmus comments further on this topic: "It is a tremendous cost saving benefit for any company if they are able to move their solution to the cloud, and perhaps even back off the cloud whenever they like without the need to re-implement any portion of the solution. This portability truly offers the customer to do 'cloud-your-way'. It is therefore important that all configuration settings and setups are essentially stored as data that will enable the move to another platform without expensive re-engineering efforts."
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