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How ERP Evolved to SaaS

The evolution of today’s technology happens at a lightning-quick pace, and ERP systems are no exception.  What was once an exclusively on-premise solution quickly became a cloud-based subscription service.  This evolution from on-premise business software to SaaS product was initially met with some skepticism, but quickly won them over with its enhanced features and greater flexibility.

Let’s step into the Wayback Machine and take a look at how ERP systems evolved into SaaS products.

The Rise of the Internet

Our first stop takes us to 2002: the beginnings of the internet age.  As ERP and More recounts, the internet was slowly becoming more mainstream, and businesses of all types began to recognize that internet capabilities were becoming a necessary part of their strategy.  Software companies and ERP vendors especially recognized this trend, as the ability for employees in separate locations to access the same information was a game changer.

The Cloud Becomes the Latest Buzzword

Fast forward to 2010, and the terms “SaaS” and “cloud” are all the rage.  New businesses want to be SaaS, and the interest in cloud-based products is growing rapidly.  Mark Symonds, CEO and President of Plex Systems, described the climate in a 2011 interview with Manufacturing.net: “Software-as-a-service is a broad term. There are a lot of people claiming to be software-as-a-service because it’s hot right now. They feel like they have to participate because it’s ‘the new thing.’”  The pricing model and ability to reduce upfront costs was also incredibly intriguing to businesses, as Symonds continued: “[F]rom a customer’s point of view, what’s really important is that SaaS be subscription pricing, that they don’t have to lay out a lot of money up front on servers, equipment, databases, and so on. That’s really helpful for customers.”

Despite all the buzz, there was still some skepticism going around as well.  According to a 2010 Gartner survey report by Dennis Gaughan, cloud-based ERP investments were less than those in CRM, ECM and supply chain.  The survey also asked why companies didn’t want to adopt a SaaS ERP, with the second most popular response being that they already invested too much money in their on-premise ERP solution to make a change.  A follow-up to the survey report revealed that other factors in slow or refusal of cloud-based solutions included company size and industry (factors that rarely stop companies from adopting new technologies these days), and concerns regarding cybersecurity.

SaaS ERP Hits the Mainstream

Today, SaaS products are the norm for vendors in every software category.  The intriguing possibilities of the cloud-based ERP proved too great to pass by for business.  The biggest selling points as found by Gartner’s follow-up, including increased flexibility of deployment and new capabilities, didn’t disappoint on their promise, and businesses in every industry enjoy those benefits today.  Cloud-based ERP vendor Plex found that the preference for SaaS ERP is growing 30 percent year over year.  Clearly, SaaS products don’t appear to be going anywhere but up anytime soon.

Despite the capabilities of SaaS ERPs, most businesses aren’t getting rid of their on-premise solution anytime soon.  On-premise ERPs still present a lot of value, not the least of which involving your business’ specific needs and customizations already being in place.  The trending ERP system these days involves combining an on-premise ERP with a SaaS option, creating the Hybrid ERP Model.  This option combines the fundamental stability already provided by an on-premise option with the data collection capabilities and flexibility of a SaaS solution.  This system has proved to be a winner thus far, so expect to hear more about Hybrid ERP as it becomes even more commonplace.

What Could the Next Step Be?

Cloud-based solutions are continually adding more and more data capabilities.  Terri Hiskey, VP of Portfolio Marketing at Epicor, believes that “Smart ERPs” are next in line.  Data-driven decision making is in high demand, and the applications that can quickly collect and analyze data are becoming the most successful.  Hiskey believes that these “Smart ERPs” could use AI to provide insights relating to improving manufacturing and helping traditional companies such as GE and Cisco to upgrade their infrastructure.

Will the Hybrid ERP model prove to be the end-all be-all for ERP?  Not likely.  As we’ve already seen, ERP software is an ever-evolving category that continues to advance and innovate.  One thing is for sure though: as fans of business software, we’re excited what the next evolution of ERP has in store.

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