Customizing ERP on SaaS – Part II
In a previous post we proposed criteria to define criteria for easy to customize ERP systems. We innocuously declared that 0% of multi-tenant SaaS solutions would meet these criteria. After hearing from several folks, we decided that more clarification is required.
Savings with SaaS
The fact that multi-tenant SaaS solutions are not 100% customizable is a good thing. SaaS solutions realize economies of scale by bundling users with similar needs on a common infrastructure or platform. The multi-tenant SaaS platform is highly tuned based on similar needs and requirements to create shared savings on hardware and IT management.
Advancement in software and cloud computing has created multi-tenant solutions with highly customizable reports, configurations, and processes. However, these platforms will never be completely customizable – and for good reason. In multi-tenant deployments, specialized code has to be made available to all users (thereby slowing overall system performance and exponentially increasing system complexity) or isolated to a few users (thereby eliminating some of the cost benefits of having common code).
A key SaaS customization problem involves interfacing with external systems – including other SaaS applications. In cases where customizations are possible, the interface can be highly inefficient due to the cost and delay involved with transmitting data over the Internet.
Savings with Customization
Customized solutions realize economic savings by improving business processes, reducing manual work, and eliminating staff re-training. Many companies drive unique value through the ability to efficiently perform core business tasks. Attempts to change these processes to conform to standards will result in a loss of competitive advantage. In other cases, changing these processes could lead to regulatory or compliance issues.
Maximizing business productivity relies on customizing some tasks, automating some tasks, and changing some tasks to conform to standard business practices. The exact mix depends on the individual business, the regulatory environment, and the maturity of the process in the company. The problem is, all of these requirements change over time.
Change is not predictable, but the fact that change will occur is. So,
- Don’t commit to SaaS or customized – if you start with SaaS, make sure that you can switch to an on-premise solution so you can grow and benefit from advanced customization.
- Don’t commit to a single datacenter – if you start with SaaS, make sure that you can switch to a competitive service provider so you are not locked-in to price increases.
- Don’t over-estimate hardware savings – as your organization grows, the savings from customization and management will dwarf any hardware savings achieved from participating on a multi-tenant SaaS platform.
- Don’t forget about standards and compliance – if you go the SaaS route, make sure that you have the flexibility to control your software and database in case your regulatory environment changes.
- Don’t customize tasks which are rarely performed – if you opt for a customizable solution, make sure that you only customize tasks which make deliver ROI or competitive advantage.