ERP SaaS 101: Services Trump Software

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:

SaaS Implementation Services

SaaS Technical Services

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:

ERP SaaS Solution Lifecycle

ERP SaaS Lifecycle

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:

ERP supporting business models

ERP supporting key business process groups

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.

Summary

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.

Advertisements

About Grady Brett Beaubouef
For the past twenty years Brett has helped customers select, implement, and manage ERP solutions across five industries (manufacturing, professional services, staffing, retail, and telecommunications). Business process knowledge and experience includes human resources, benefits, compensation, recruiting, time & attendance, finance, resource scheduling, contract administration, services procurement, sales, billings, project accounting, and project/portfolio management. Software selection experience includes evaluation of both ERP software and proposed implementation services. Brett has recently authored a book on leading ERP/COTS implementation strategies.

7 Responses to ERP SaaS 101: Services Trump Software

  1. erpready says:

    Reblogged this on ERP Ready Blog and commented:
    Good points that are often not included with a SaaS discussion.

  2. Sunil Pande says:

    Brett, thanks for reminding us of the obvious. This is something we need to constantly tell ourselves.

    Business value cannot be realized without the thoughtful implementation of a product in a way that is tailored to support how a business works as well as its unique goals.

    Beyond implementation one needs employees to understand how best to use the system that those business objectives can be achieved.

    Both require experts to train and guide the management teams at these companies as well as employees in this rather perilous journey.

    VARs, accountants, other experts from within the company and from outside play this critically important role. So in the end it all just boils down to people, and experience, and skills and attitude etc.

    The system one is implementing can get in the way, or enable. Most do both.

    But it is only people who can “git it done”.

    Buying a car does not get you where you want to go. Neither does buying an ERP system 🙂

    Thanks for the reminder.

    Sunil Pande, CEO
    Versaccounts
    http://www.versaccounts.com
    Cloud Accounting & ERP solution for Small and Medium Sized Businesses Worldwide.
    One Price. Unlimited Users. All Modules.

  3. Pingback: ERP SaaS 101: Services Trump Software | Pardaan.com

  4. muskaan121 says:

    Great Blog !!!
    I like the way you written the post.
    Post is informative and very easy to understand.
    Eresource provides Infrastructure ERP solution that helps in coordinating all the areas which are very relevant to any construction or infrastructure business.ERP software for Infrastructure companies serves as a ready resource for different areas of construction.
    Thanks for sharing such a nice post…

  5. Pingback: New PM Articles for the Week of September 16 – 22 | The Practicing IT Project ManagerThe Practicing IT Project Manager

  6. Pingback: ERP Project 101: Challenging ERP Requirements | ERP the Right Way!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: