If your organization is currently weighing the options of ERP, especially cloud ERP, it is vital to take a step back to make sure your business is seeing the full picture.
First and foremost, your company's requirements should weigh most heavily on where to start. Doing so will enable the business to shortlist vendors, as well as ultimately make the decision of cloud or on-premise. In addition, the following list of important issues for small to midsize companies can further shrink the playing field for vendors.
1. Hybrid or hosted systems. Manufacturers, distributors, and professional service providers no longer need to be locked into one type of system, especially when it comes to ERP software. The best ERP vendors in the industry offer a mix of options, including hybrid systems that provide services that can connect hosted applications with on-premise ERP, all configured based on the customer's needs.
2. Traditional software hosted in the cloud. While traditional on-premise ERP vendors are working to offer more modular and configurable options, SaaS ERP vendors are adding breadth and robustness to their feature sets. To overcome this, one option is to take a traditional on-premise solution and begin hosting it on the cloud, thus leveraging the flexibility offered by the cloud. Another alternative to this is to completely migrate your company's entire system to the cloud, as is offered by SAP Business ByDesign and SAP Business One OnDemand.
3. Mobile Access. When examining ERP vendors, it is critical to test and examine an ERP vendor's software agility by looking at its mobile device capability. Mobile devices enable employees to quickly access business critical information like stock levels, sales orders, accounts, and reports; all of which can help a business establish and maintain a competitive edge. Further, ERP systems that offer full-feature mobile access may further streamline certain business processes.
4. Customization versus configuration. Today, for the most part, ERP systems are well-designed, and are modular and configurable, which helps minimize customizations and the associated costs. As part of this, SaaS ERP tends to be more configurable than traditional ERP software, but the traditional vendors are quickly catching up. Further, companies evaluating must identify which areas of the business will require customization, including workflows, user access and privileges, data integration, reporting and security. However, it is important to recognize that customizations can be costly. An alternative to such can be to decide where current business practices can be modified to fit within existing software's off-the-shelf functionality.
5. Cloud operational practices and capabilities. The best cloud ERP providers can easily articulate and disclose their practices for certifications, data governance, compliance and security. Operational procedures should include automatic security surveillance as well as the ability to respond dynamically to changes in network, user and storage resources, all with customer visibility into such changes.
6. Calculating costs of SaaS and on-premise ERP. Any good cloud ERP system should have simple and predictable monthly subscription fees. However, some cloud ERP vendors may initially sound less expensive, but with a full count of users, functions, storage and access all added together, the solution could end up being more expensive than originally thought. On the same token, comparable on-premise software costs include ERP application licensing, hardware and software infrastructure, software maintenance and update fees, IT staff allocations, rent, utilities and network costs, which can also be much more than originally thought. Both SaaS and on-premises ERP can include customization fees. It is critical that a business fully examine the full first, second, and third year, etc. costs (for cloud ERP) as well as the costs for replacing servers as well as other associated overhead costs (for on-premise ERP).
7. ERP vendor's understanding of the business. It is critical for any company evaluating ERP to feel confident that the ERP vendor understand their business. Further, the vendor should know your company's strategic direction, as well as the functionality requirements, to earn their spot on the vendor shortlist. It is equally important to determine what functionality you want before diving into the implementation. Scope creep can be costly and can cause additional issues to come up during implementation. While the SaaS ERP vendor ecosystem is still in its infancy, it is getting a lot of attention. Given the sector's bright future, aligning with a vendor that offers solid ERP options as well as a solid cloud offering, will ensure that you company can remain competitive and viable in the short & long term.
Navigator is SAP's #1 Global Partner for Cloud Solutions. To learn more about SAP and SAP's extensive cloud portfolio, visit http://nbs-us.com/sap_cloud.
