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.

What is ERP?

What is Entreprise Resource Plannig (ERP)?


ERP Systems are computer programs used by a large amount of companies in order to organize and to manage their processes and resources more efficiently. Under these resources we understand for example; people, stocks and even money. As these resources are the main determinants of the success and development of a company, they have to be well organized.
Important processes within a company are supported by several smaller ERP modules that are included in an ERP system. These modules all support specific tasks within the company.
Companies have a whole bunch of different business processes that need to be supported; we could divide them into basic modules and into more specialized modules.
Basic modules can be for example: customer relationship management, supply chain management, projects, financials, accounting etc
Under the more specialized business modules we find the processes that are related specifically to a certain company or its department. For example the making and managing of order notes.


An ERP system is based on a common database; this allows every department of a company to store and retrieve information in real-time. Moreover, the modular software design allows the company to select the modules they need, mix and match modules form different ERP vendors, and add new modules of their own to improve business performance.
The advantages of ERP are numerous; the main advantage is that all the information systems are incorporated into one central database which makes managing a lot easier. For example when you change something, the different processes will adapt to this change which saves you a lot of work and consequently also money.


ERP Systems are generally sold in basic packages, but if an organization wishes a specific package made for their processes that’s possible. In general this isn’t often done because of the extremely high prices of these packages.
Big organizations may of course prefer this second possibility because of their big and complex structure. In such organizations ERP is of great importance. Lately, more and more Small- and Medium-sized Businesses (SMB’s) have discovered the advantages of ERP systems. As time plays an increasingly important role in our current society, organizations need systems that help support their processes. Taking care that suppliers deliver on time, keeping clients satisfied and limiting stocks are just a few of the activities that need to be managed efficiently and within time.
The providers of ERP systems are big software companies like German software house “SAP”, Dutch giant: “Baan”, Oracle and JD Edwards.

ERP and SaaS; the future

These days, in our modern society the absence of computers is almost unthinkable. Just imagine everything computers do for us; they stock, calculate, entertain, plan... In the business world this is not different, companies use modern technology to fulfil tasks that were normally done by employees. Therefore specialized software systems have been developed; these systems manage and support organizations with their business processes in order to save them time and money.

These systems are generally known as ERP systems. A large amount of companies use ERP with success, though they mostly have one important issue; the amazingly high price. "Simple past", if we have to believe some important software vendors lile SAP. They pretend that the combination of SaaS with ERP is the solution to the high prices of ERP packages. SaaS allows clients to lease software instead of purchasing it as a whole. Instead they have to pay for it on a regular base which is much more affordable. SaaS-ERP should be the important breakthrough then, but is this new technology already advanced enough to be applicable for orangizations? And is it really much cheaper as vendors claim?

These and other questions appear to be answered negatively according to some respected experts. Gartner, for instance, believes that we are still a couple of years removed from the day that SaaS-ERP will have its succesful entrance in the business world...