On-premises deployments of enterprise resource planning (ERP) systems remain the most common means of system implementation, but for how long?
There is a growing awareness, from suppliers and customers alike, that this model is set to change, or at least be modified to accommodate new technologies.
So says Craig Johnston, marketing manager at Bluekey Seidor, adding that to address this evolution in ERP, large established suppliers have made significant investments in cloud and software-as-a-service (SaaS) solutions over the last few years.
As the cloud and SaaS momentum grows, it is important to understand the specific business needs, as both SaaS and ERP solutions have plusses and minuses, notes Johnston.
"For example, on-premises ERP systems might be appropriate for back-office functions such as finance, stock management and big data processing, whereas other purpose-built point solutions, for CRM or sales, may be better suited for handling tasks in a cloud environment."
In general, SaaS systems are simpler to deploy as they do not require purchasing of additional servers and other IT infrastructure, or the physical installation of software and applications, he explains.
However, the relative technical ease of installing and running SaaS systems may be offset by the lack of customisation. "Things get even more complicated when deciding between a private or public cloud, as there are significant cost and functionality differences between the two."
In addition, an on-premises ERP system can be customised and integrated with other software. "SaaS systems have limitations in terms of customisation capabilities. Then again, this inflexibility of SaaS systems could reduce the possibility of technical difficulties that might occur when customising software."
New understanding
Johnston says ERP systems are not known for having intuitive user interfaces. "However, the influence of user experiences on non-related platforms, such as social media and Web site design, is shaping a new understanding in how users should be interfacing with technology.
"This has been problematic for established ERP vendors since on-premises solutions would require significant changes to front-end technical architecture. Cloud-based SaaS ERP solutions are newer offerings and have invested significant resources into building the systems around more user-friendly user-interfaces and mobile functionality."
When it comes to cost, he says the cheaper initial cost of a SaaS system relates mostly to the ease of implementation, which is compelling for SMEs. But, when it comes to weighing up the actual cost of a system over the lifetime of the business, SaaS might be costlier in the long-term, as the business never owns any of its resources.
"Consider the cost of making subscription payments for years, every time upping the amount when new employees join the company and to accommodate business growth."
Johnston says this becomes particularly precarious when a business has to trust private data to an outside hosting service. "These very real concerns about data security have been a thorn in [SaaS's] side ever since the first SaaS products were launched. Companies fearing that valuable information assets, such as customer lists and sales information, can be compromised have voiced concern about the potential security risks possible when entrusting it to a third-party."
Along with security concerns is the worry that the business does not have a direct hand in many of the associated support activities underpinning a well-maintained ERP system, he notes.
"Activities such as audit trail compliance, independent operational audits and daily backups provide a sense of comfort. Potential SaaS customers are worried about what will happen if they had to leave the service. While the most credible suppliers do provide clear exit terms as well as data extract procedures, safeguarding how the return of data is to be done and in what format it is to be presented, remains critical."
Data stored on-site has to comply with POPI and other data security laws, making any breach in data security the company's responsibility. "Storing data in the cloud is actually more secure and also less impervious to attack."
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