Integration of SaaS and ERP

Integration of SaaS and ERP

The last few years there has been an enormous hype around the combination of ERP-systems and SaaS. SaaS can be seen as a solution for the high prices of ERP which scares off a lot of companies. For a monthly fee companies can get the software they need much faster than outright purchasing it. They have a much less upfront expense and more flexibility in licensing terms, as far as they don’t buy more licenses than they actually need.
It is therefore software companies are increasing their research and development in this technology. Today, a company can already use a SaaS-ERP package, although these represent only a very small niche. An early provider is for example Tuppas; a company specialized in ERP and manufacturing execution software (MES) for manufacturing. They let you add just the functionality to your system instead of installing an entire ERP solution.


Important obstacles

Gartner, an American organization that examines and advises IT-services to help and support IT users in their decision making and that is also responsible for the invention of the term “ERP”, is critical about the latest movements in this industry. In their latest reports they conclude that the SaaS- ERP is not yet full grown enough to make a useful support. I like to compare it with two separate people who work very well independent, but when they marry, they lose some of their capabilities and efficiency because they are still too young to live together.

The SaaS-ERP technology is still far from waterproof, and numerous “obstacles” are blocking its way to distribution. For instance there are some remarks on the idea of instant-ready which people have of SaaS. It is so that when you use SaaS, you still have to implement it into your organization; processes need to be redefined, integration points need to be pointed out, etc. It speaks for itself that in case of ERP, this is not an easy operation.
In addition to this problem organizations have to keep in mind that with SaaS they never actually own the ERP system. Normally this wouldn’t be much of a problem if not their flexibility would stagger from it. Organizations can still configure and set-up the software they want, but when it comes to hardcore workflow redesign or customization of the software, SaaS is much more limited in its capabilities. This may be a reasonable trade-off for SMB’s, but many of the larger organizations struggle with this concept.



Another obstacle for the distribution of SaaS-ERP has something to do with the Total Cost of Ownership. It is more than likely that the total costs of using this technology will eventually be higher than before because of its ongoing basis. This problem is not only for the users, but also for the providers of SaaS-ERP. The complex architecture of SaaS-ERP results in high intern efforts of the providers and costs them a whole bunch of money. Moreover the constant upgrading and maintenance of the system makes it even harder.


The probably most sensitive obstacle has something to see with the security and privacy of the system. Organizations have to be aware of the fact that the low- cost-service of the SaaS-ERP systems might decrease the level of security and privacy of their business. Important information concerning their financial status etc could be found in the database if not protected properly. They should therefore be guaranteed by the provider that their business is in safe hands, maybe at the cost of a higher price.