Cloud vendors limit ERP by counting users

May 10, 2010
By manchester
Count work, not users

The real benefits of cloud are being squelched by ERP SaaS providers who offer services with per-user fees. The cloud is supposed to provide for limitless users, but most vendors are pocketing the benefits of the cloud and passing costs to customers though per user fees.

Three Common Limitations of User-Based Fees

Limit 1: Manual Processes

The cloud is everywhere and many web-based solutions do not require the deployment of software. So why are many businesses still submitting timesheets and expenses manually, instead of through an employee portal? Answer … user based fees. It’s difficult to justify paying $99/month for somebody to enter an expense report.

Limit 2: Manual Approval Steps

The cloud allows executives to approve purchase orders, sales discounts, timesheets, and expense reports from anywhere. So why are many businesses doing this approval manually via email, instead of through an employee portal? Answer … user based fees.

Limit 3: Account Sharing

The cloud allows sales people to enter leads, opportunities, and view reports from anywhere at any time. So why are many businesses sharing a single ERP or CRM account among several people? Answer … user based fees.

Solutions to the User Based Fee

Pricing Changes

The advertisement below describes a solution with unlimited users. Maybe the vendors are making the change faster than we think.

Cloud ERP advertisement

Cloud ERP advertisement

In addition, we have spoken with customers who have received discounted rates for “infrequent” users with ERP and CRM vendors. Most of these pricing changes were done as part of a large enterprise deal where a significant number of full-priced accounts were purchased.

Web front ends

Several value added resellers (VARs) try to overcome user-based fees by building web add-ons for ERP cloud applications. These applications collect data from multiple users and dump the data into the database.

Creating web front-ends avoids user-based fees, but can create other problems. One potential problem involves user management – managing separate logins for the ERP and web entry systems could be time consuming and error prone. Another potential problem has to do with validation of entered data. The web front end must utilize or pass-through the exact same business logic as the online screens, otherwise there will be significant out-of-sync conditions as well as difficulties when new ERP system releases are published.

Shared Order Entry Accounts

Some companies purchase a single account for “order entry” which is shared by several users (for example, the accounting department). This avoids user fees, but creates other problems. For example, if an incorrect entry is made, then you cannot trace the error to a specific person. Also, at the end of an accounting period (crunch time), you cannot add personnel because only 1 user can be on the system at a time.

ERP Cloud News Recommendation

If you have multiple users and multiple offices, find a vendor with allows you to pay by resources, not by users. Alternatively, push your existing vendor to provide cheap user accounts with lower prices and limited capabilities.

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