Delivering ERP on a SaaS model is great and offers enterprises of all sizes a viable, scalable and flexible model, which provides a lot of benefits to users. Gartner predicts that nearly 30 per cent of new license purchases will be in the form of SaaS or will be delivered using SaaS model. IDC predicts a growth rate of 40% in SaaS model.

Looks very interesting but Is SaaS for everyone? No hardware costs, no software costs, no upfront license costs, less training needed, short implementation cycle, accelerated ROI, vendor managed hardware maintenance, upgrades and software maintenance. The advantage of going the SaaS way is just too many. However, it still may not be for everyone.

How do I figure out if SaaS is for me or not? If your needs for business management software goes anything like this, then it is not for you:

  • I have complex or very specific business processes
  • I have well established business processes that I cannot change
  • My business model keeps changing and is constantly evolving
  • I am a mid-market company or I am a large-sized company
  • I need to integrate my business management software with legacy applications
  • I need absolute control over whatever I do
  • I am very paranoid about security

The implementation costs of an ERP are expected to be in the range of $3 to $10 per dollar spent on the software itself. When you consider ERP implementation, there are obviously more ways to fail than to succeed, most projects require years of tweaking, support costs are prohibitively expensive and can be ten times the cost of software.

Implementation costs gets allocated towards training, integration, testing, data conversion and data analysis and none of this can be ignored if you are looking at a system that can deliver the business benefits of implementing an ERP system. The significance of each of these activities is defined thus:

  • Training – employees have to learn new processes and not just a new software interface; talks about change management and is typically 10% to 15% of the total budget
  • Integration – it is not easy, for links have to be built between ERP and other best-of-breed systems on a case-to-case basis
  • Testing – has to be process driven; use real-time data preferably with real employees who would be using the system and the same volumes as expected
  • Data conversion – the most underestimated cost activity and even the best of data needs changes to match process modifications necessitated by ERP implementation
  • Data analysis – reports in ERP packages needs to be combined with goals, budgets etc. to make business meaning and this cost is more often than not overlooked

After all, the cost of ERP software is only a fraction of the total cost of the project.