What Price Will You Pay By Saving With SaaS?

Trying to decide between a hosted/Software as a Service (SaaS) ERP deployment or an on-premise deployment of a new enterprise resource management system can be quite the dilemma.  It requires judging your current business needs against the needs you anticipate having as your business grows (ideally as a result of your new software solution.) 

Wouldn’t it be great to ask some companies who weighed these options recently what they decided and how that decision has affected their business?

Well, that’s just what the Panorama Consulting Group did before writing their 2010 ERP Report.   They surveyed 1,600 organizations that have implemented a new ERP solution in the past four years and compared on-premise deployment implementations side-by-side with SaaS deployments. 

The first thing they discovered is that on-premise implementations take an average of 6.8 months longer than SaaS/hosted implementations.  As a result, SaaS ERP implementations are also lower cost than on-premise and yield a slightly higher level of executive satisfaction. 

There are some drawbacks to SaaS, however.  Although SaaS is 2.6% more likely to make your executive happy, on-premise implementations are more likely to make you and the other users of your ERP solution happy.  SaaS implementations are 19.4% less likely to deliver the full business benefits that are expected. 

Additionally, despite the fact that SaaS implementations are .7% less expensive than on-premise, a SaaS implementation is more likely to cost more than you expect it to.  70.6% of SaaS implementations exceeded their budgets, which is significantly higher than on-premise initiatives. 

Panorama attributes this disparity to unrealistic implementations expectations.  There is a great deal of hype around SaaS and it is easy to get caught up in the promises of simplicity of use and a lower cost implementation.  However, it’s imperative to keep in mind that simplicity of use means less software flexibility, which can hinder a hosted deployment in meeting all of your expectations. 

As you weigh your options, ask yourself this question:  Am I willing to pay the price of exceeding my budget to implement a solution that most likely won’t be used to its full capabilities just to save on software and services costs?

If you’d like help making this critical business decision, request a free Business Strategy Assessment from Socius.  We can help you determine which deployment option can bring you the greatest amount of benefit for your investment.

By Socius, an Ohio Microsoft Dynamics GP and ERP Solutions Partner

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