What is SaaS ERP & How Does it Compare to Traditional ERP?
A SaaS ERP is a cloud-based ERP system that helps accountants and financial professionals manage finances, automate tasks, and access real-time data from anywhere.
But knowing what it is and how it can impact your business are two different things.
Using my experience in digital software, I’ll show you how SaaS ERP works, what benefits it brings to your role, and how to choose the right solution—so you can make smarter, faster financial decisions with less stress.
What is ERP?
Enterprise resource planning systems are technological solutions that allow businesses to manage many of their business processes from one central place. It gives real-time insight into how your business's central functions are performing, allowing you to strategize and allocate resources effectively.
Common business units covered by ERP platforms include:
What is SaaS?
SaaS, or Software as a Service, is a cloud-based software delivery model where applications are hosted by a provider and accessed by users over the internet. Instead of buying and installing software on individual devices, users subscribe to it—often on a monthly or annual basis—and use it via a web browser.
For example, if you have a Netflix subscription, you're already using SaaS in your daily life. But while the delivery model is familiar, modern SaaS ERP systems come packed with advanced features that make them especially appealing to finance professionals:
| Feature | Benefits |
| Real-Time Reporting | Provides up-to-the-minute visibility into financial performance, enabling faster, data-driven decision-making without waiting on monthly reports. |
| Automated Workflows | Streamlines repetitive tasks like invoice approvals, expense tracking, and reconciliations, saving time and reducing manual errors. |
| AI-Driven Forecasting | Uses historical data and machine learning to predict revenue, cash flow, and budget variances more accurately. |
| Multi-Entity and Multi-Currency Support | Simplifies consolidated financials for companies operating across geographies, reducing the complexity of managing multiple subsidiaries. |
| Blockchain-Based Ledgers | Adds a layer of security and transparency to financial transactions by creating immutable, time-stamped records. |
Is SaaS ERP Different from Cloud ERP?
If it walks like a duck, looks like a duck, and quacks like a duck, it’s a duck. It's just a different type of duck.
There are differences between SaaS ERP and cloud ERP systems, but they mostly boil down to the level of customization you'll get (and the price difference you'll see to get that customization). Cloud ERPs are also accessible across multiple servers and come with different deployment types, including:
- Multi-Tenant SaaS ERP: Multiple businesses share the same application instance. One example is NetSuite, where there is a central ERP system that all users access, but different modules that help make it your own.
- Single-Tenant Cloud ERP: Gives each company its own instance of the software and greater control over updates and customization.
- Private Cloud Deployments: The ERP software is hosted in a dedicated environment, often preferred by companies with stricter compliance needs.
On the other hand, SaaS ERPs are hosted on the providers server and is accessed via a subscription model.
5 Benefits of SaaS ERP
Switching to a SaaS ERP can make your financial processes faster, smarter, and easier to manage. Here are five key benefits I've found while researching digital software:
- Lower Upfront Costs: With SaaS ERPs, you don’t need to buy servers or pay for complex installations. This helps keep your IT spending lean and manageable—which can be especially helpful for growing businesses trying to avoid big, up-front expenses.
- Quicker Updates: SaaS ERP providers handle all updates for you automatically. That means you’re always using the latest version with the newest features, security enhancements, and performance improvements—without lifting a finger.
- Greater Accessibility: With a SaaS ERP, you’re not tied to one location. Instead, you can log in from your laptop, tablet, or even your phone. Everything is hosted in the cloud, so your data is always available and up to date, no matter where you are.
- Easier Implementation: Considering you don’t have to purchase new equipment, hire new employees, or install software on local machines, it’s much easier to implement a cloud-based ERP system.
- Increased Flexibility: Whether you're adding users, features, locations, or entirely new departments, a SaaS ERP can grow with you. It’s built to scale, so you can start small and expand as your business evolves—without switching systems or reworking your whole setup.
3 Disadvantages of SaaS ERP
While SaaS ERPs are highly beneficial, they do have some drawbacks, such as:
- Limited Customization: SaaS ERPs usually come with preset features and templates, which can be limiting. You can often tweak settings or add plugins, but you may not be able to fully tailor the system.
- Ongoing Costs: While you avoid large upfront fees, SaaS ERPs come with ongoing monthly or annual costs. Over time, these can add up—especially as your team grows and you need more user licenses or advanced features.
- Less Control Over Updates: SaaS ERP vendors manage updates and roll them out on their own schedule. While it’s great to always have the latest features, sometimes these updates can affect your workflow or change parts of the system you’re used to.
SaaS ERP vs. On-Premise ERP
Both on-premise ERPs and SaaS ERPs look to centralize company data and processes within a single unit. The only key differentiator is whether it's installed on your server, or accessed via the cloud.
On-premise solutions are generally ideal for larger enterprises or businesses in industries that manage sensitive data, such as healthcare or manufacturing. On the other hand, SaaS ERP solutions are targeted more toward SMBs or companies who need access to their financial information at all times.
SaaS ERP Cost
Since SaaS ERP solutions are subscription-based, the costs can vary depending on your level of customization, number of users, integrations, and more.
Most SaaS ERPs are charged on a monthly or annual basis with the cost typically including hosting, maintenance, security, updates, and support. As a result, companies can easily save on IT and maintenance costs.
Where SaaS ERP Is Most Beneficial
The easy access to SaaS ERP makes it especially well-suited for organizations that want to stay agile without investing in heavy IT infrastructure. This includes:
- Startups and SMBs: When you’re a lean team trying to punch above your weight, you don’t have time, or money, for complex, on-prem setups. SaaS ERP offers small businesses plug-and-play functionality, regular updates, and predictable pricing, so they can stay focused on scaling rather than babysitting servers.
- Manufacturing and Distribution: Yes, even the folks working with physical goods are tapping into the cloud. These industries benefit from SaaS ERP's ability to handle inventory management, production scheduling, and supply chain coordination in real time, all without the IT overhead of traditional ERP systems.
- Professional Services: Think consulting firms, marketing agencies, or legal teams. They thrive on project-based work, resource planning, and billable time. SaaS ERP helps track all of that with streamlined reporting and fewer headaches around software maintenance.
- Multi-Location Businesses: Whether you’re running franchises, remote teams, or a global operation, SaaS ERP’s cloud-native accessibility ensures everyone stays in sync. No VPNs or local installations needed.
Common Implementation Challenges
While SaaS ERP systems offer plenty of advantages, implementing one isn’t always a walk in the park. Like any major business system overhaul, there are genuine hurdles finance and operations teams should prepare for. The good news? Most of these challenges can be addressed head-on with the right strategy.
Data Migration
Moving data from legacy systems to a new ERP can be messy. During the process, inconsistent formatting, incomplete records, and data silos often rear their heads.
Change Management Resistance
SaaS ERPs often introduce new workflows and interfaces, which can unsettle teams used to older systems. Even helpful automation can feel like a disruption.
Cost Overrun
While SaaS pricing is more predictable than traditional ERP, costs can still balloon if the project timeline stretches or new requirements pop up mid-stream.
Poor Training
Implementing a SaaS ERP is a major shift in how your finance team (and the broader organization) operates day to day. Lack of training and onboarding can lead to inefficiencies and delays in productivity.
Embrace SaaS ERP For Your Business
Whether you’re an expert ERP user or you don’t know your ERPs from your ABCs, it’s clear that cloud-based systems offer many advantages over on-premises ones.
So what are you waiting for?
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