SaaS rated less likely to deliver business benefits

February 9, 2010
By djohnson

Panorama Consulting recently published a study called the 2010 ERP Report which provides 5 key conclusions gathered from a survey of approximately 1,600 respondents who implemented various mid-range ERP solutions.

We encourage you to read the paper to see statistics on ERP implementation expeditures, timeframes, and expectations. In this post we would like to add our insights with regard to point number four, SaaS implementations take less time than on-premise, but deliver less tangible business benefits.

Observation 1: SaaS Implementations Take Less Time

Panorama Consulting: SaaS versus On-Premise Implementation Times

Panorama Consulting: SaaS versus On-Premise Implementation Times

Observation 2: SaaS Implementations Deliver Less Tangible Benefits

Panorama Consulting: SaaS versus On-Premise Results

Panorama Consulting: SaaS versus On-Premise Results

ERP Cloud News Analysis

Hypothesis 1: The conclusion that SaaS implementations take less time than on-premise, and deliver less value can be explained by the fact that SaaS implementations are not are being customized to the same extent as on-premise solutions.

Proof point 1: When implementation times are reported in months, it means that significant customization and integration is being done. The physical implementation of ERP software can take lnoger (maybe weeks) in a client-server implementation, but for a 18 month deployment, significant analysis, integration, and customization is required. Other things equal, SaaS will save money on physical implementation and deployment (a day or two instead of a week or two), but the amount of analysis, integration, and customization will be similar unless working with a very antiquated on-premise solution. Thus, we can conclude that the SaaS time savings in this report are being derived from the lack of customization, not from physical deployment.

Proof point 2: Given that the SaaS deployments are not customized to the extent that the on-premise solutions are, it’s not surprising that more business goals are not being met in the case of SaaS. Customizations are done to meet business goals, so forgoing them will result in the lower realization of tangible business benefits.

Hypothesis 2: A study which compared fully customized SaaS deployments with fully customized on-premise deployments would yield very similar results depending on the customer.

Observation 3: Not many SaaS solutions are fully customizable because they are written on proprietary platforms inside a controlled operating environment. The advent of cloud platforms that allow full customization are now available. These platforms will give clients more options when it comes to ERP deployments, but may result in longer implementation timeframes.

Final Opinion

Modern cloud systems are advantageous because they can be run more efficiently under some circumstances and give customers choices when it comes to implementation, customization, and integration. My selecting a flexible SaaS solution that also has an on-premise option, customers can minimize costs according to their particular business needs.

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One Response to “ SaaS rated less likely to deliver business benefits ”

  1. Graham Perry on February 10, 2010 at 3:52 am

    Some good points. Another issue worth considering is availability. Public cloud services suffer outages just as in-house and outsourced services do – the difference is that you currently have less control and backup with the cloud.

    Cloud SLA’s are written for the mass market. Your ERP is critical to your business and anything but a commoditised offering.

    These issues will be addressed as the cloud market matures but for now I wouldn’t bet my organisation on the cloud.

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