Pros and cons of SaaS ERP systems

More companies are turn to cloud computing and software as a severice (SaaS), especially for large, resource-intensive applications like enterprise resource planning (ERP) systems. In this guest post, software developer Patricia Jones discusses the pros and cons of cloud-based ERP software. 


As with other business process management software, there is a rush among CIOs to move their ERP systems to a virtualized environment as well. As a result, the demand for SaaS ERP has grown significantly over the last year. But in many cases, organizations jump on the hype with cloud-based systems rather than make a well-planned business decision. ERP systems integrate all of the different units of an organization and therefore play a very crucial role in the business’s success.

While SaaS ERP adoption is growing, many organizations are still not comfortable with the idea of losing or having only limited control over their data offered by cloud computing. But still, hosted solutions for enterprise applications are gaining popular because they offer a few advantages over traditional on-premise solutions.

Advantages of Saas ERP

Cost of ownership: For many businesses, cost is the greatest advantage of hosted services. A hosted system allows companies to reduce the costs of purchasing software licenses, buying and installing hardware, and setting up the network. It can also help lower the expenses of maintaining the IT infrastructure.  The easy pay-as-you-go model further has allowed organizations to customize their software needs according to their enterprise demands.

Lower risk of deployment: By choosing a hosted service, organizations can free themselves from the worries of installing hardware and platform software, restoring database, enabling security features, and maintaining and managing the software. SaaS will ensure faster deployment with less risk of project failure.

Accessibility: For companies with a global presence, SaaS enterprise software can allow different locations to have the same level of access to the system. Since software is hosted in a virtualized environment users can access it anytime and from anywhere. This feature has helped companies to integrate their global operation to a single platform.

Upgrade: Hosted enterprise applications eliminate the issues of being stuck with an outdated software system. The service provider ensures the platform is continuously upgraded for the benefit of its users.  Moreover, software-as-a-a-service ERP allows users the flexibility of customizing the system according to their needs.

Disadvantages of hosted solution

Buy v/s Rent: Even when the initial cost of a hosted ERP system is less than licensed software, businesses need to consider the total cost of ownership of rent the system for a period of time versus the large up-front costs of implementing an in-house system. Further, SaaS software doesn’t eliminate the need of internal IT staff completely. Companies also need to keep in mind cost escalation of services in future. There can also be issues with successful integration with other business process application, further increasing IT expenses.

Security: Some organizations do not feel that SaaS providers offer adequate security layers to protect their sensitive data from malicious attacks since often the security layers are common across the virtualized environment and may not meet companies’ particular requirements.

Stability: Along with security, another factor to consider is stability of the vendor as well as its services. Since the services are available over Internet, outages can be severe at times – leading to loss of productivity and revenue.

Upgrades: Some users consider too many upgrades from the service provider a hindrance for their functionality. Some like to enjoy the freedom to be able to upgrade the system when they need it. Too many upgrades at fewer intervals may ward-off users and dilute the advantages of SaaS.

Yet, the barriers to choose remote enterprise application services are melting fast and an increasing number of businesses are embracing the idea for the convenience it offers, especially among large enterprises with a global presence. Convenience, portability, mobility, accessibility and affordability are the main factors leading organizations to consider a SaaS ERP solution.

About the author: Patricia Jones is a software developer. She is working with various ERP software companies from last 5 years. Successfully, she deployed lot of enterprise software applications in her career.