ERP SaaS 101: Services Trump Software
September 22, 2013 7 Comments
How many ERP SaaS offerings are in the market today? The number depends on who you ask but it is a fair statement to say that all Tier I and the majority of Tier II ERP vendors have a SaaS offering. A majority of the market and many ERP analysts still take an on-premise approach to evaluating ERP SaaS offerings. Services, not software, will have the greatest impact on ERP SaaS success. The purpose of this article is to examine the impact services will have in a SaaS model.
Installation Is Not an Implementation
Ah, the battle cry of ERP SaaS “You can be up and running in a matter of minutes!” Now, it is a fair statement you will have a running system but it is a far cry from a configured business solution. Consider the key activities required for this transformation:
Even though ERP software and infrastructure can be provided in an accelerated fashion, the business value realization of an ERP SaaS model can only be achieved through the effective delivery of technology services. SaaS ERP is not a push-button solution. I submit that technology services should have an equal or greater emphasis on ERP SaaS selection than ERP SaaS software.
Great Services Can Cover a Multitude of Software Gaps
ERP SaaS software installation is a very small step in ERP SaaS experience. Consider the following illustration:
Following are a few points I would like to elaborate. First, installed ERP software does not provide any business value own its own. Business value is only realized when software is configured and implemented in a production environment. Second, let’s not forget that an ERP SaaS model is outsourcing technical services to the ERP vendor. Third, ERP SaaS software release cycles will be at least three times faster than traditional on-premise ERP software. That means that a SaaS software model will address gaps in a shorter term. As more customers look at SaaS ERP I believe that services not software will be the emerging competitive differentiator.
Majority of ERP SaaS Offerings are Non-Competitive Differentiators
For purposes of this discussion please allow me to broadly categorize business processes into three areas:
There are some key concepts that should factor in the ERP SaaS selection process. First, competitive advantage only comes from revenue-generating business processes. For example, would having the best of breed solution for SOX compliance enable you to gain market share? Also consider if you would highlight your Payroll system as a competitive advantage to your customers. A best practice is not a competitive practice. Organizations, just like individuals, cannot be the best in everything but it makes sense to be the best in your revenue generating activities. A best-of-breed SaaS solution is of little value if the ERP SaaS provider does not provide competent technical services for reliable integration across multiple environments.
Too often we focus on the cart before the horse. I believe that we are experiencing this misalignment with the emerging ERP SaaS market. The best ERP software is of little value if you cannot implement a viable, manageable solution. Technical services provided by the ERP vendor’s SaaS operations will have the greatest, long-term impact for business success. Pick an ERP vendor that will focus on improving both their ERP software and SaaS technical services.