SaaS and Cloud ERP Observations: Is Cloud ERP right for you?

December 12, 2013 from Aberdeen Group – “Over the past six years, Aberdeen has ben measuring the willingness of organizations to consider Software as a Service (SaaS) as the deployment model for their ERP implementations…”

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180 View – Although the article is a year old, it is still relevant. The article distinguishes between 2 cloud models – one is SaaS or a public cloud and the other is a hosted model or private cloud. The definition by Aberdeen is confusing as both models are hosted. However public cloud and private cloud does make sense. In the public cloud, organizations are sharing the same instance of the ERP system. In the private cloud, organizations can have their own instance of the software. The public cloud has the advantage of lower costs as multiple organizations are sharing the same resources and are all updated at the same time with bug fixes and enhancements. A private cloud has the advantage of being customized for unique requirements that are not possible without changing source code.

The article does show that there has been a 53% increase in the adoption of SaaS in small organizations which is not surprising in that small organizations don’t have the resources or expertise to manage the infrastructure. The article also claims that SaaS implementations achieved a Return on Investment (ROI) in 23.61 months and on premise achieved ROI in 31.09 months. It’s not clear where these numbers come from but we can’t imagine they are accurate. Our experience is that ROI is wishful thinking in an ERP implementation as many of the benefits can’t be quantified.