Gartner Research reports that the worldwide ERP software market grew by 8% in 2022, bringing its total value to $44 billion. But why are so many companies hopping on board the ERP train? Simple: Enterprise resource planning software, including SaaS ERP solutions, streamline key business processes, maximize efficiency and make it easier to grow a profitable business.
The CFO Club is all about redefining how businesses use SaaS for automation & efficiency, so I asked trailblazing tech experts and CFOs for their input on using ERP software to automate workflows, simplify supply chain management practices, transform customer relationship management, and more.
The bottom line? SaaS ERP software is the “secret sauce” you need to make your company more successful. Here’s how it can help.
What is SaaS ERP?
Just in case you’ve spent more time in finance than in tech, let’s start with a definition of software as a service (SaaS). Back in the day, companies had to buy hard copies of their software and install them locally. If you wanted to update the software, you had to pay for the newest version and go through the installation process all over again.
Then cloud-based software took the world by storm. With cloud-based solutions, you always have access to the latest version of the software. Additionally, a cloud service hosts the software, eliminating the need for business owners to buy new servers or hire extra IT employees to install and maintain everything.
SaaS takes it a step further by combining cloud computing with a subscription model. Instead of paying for each version of a software package, you pay a monthly, quarterly, or annual subscription fee. If you purchase a SaaS ERP, you’ll have access to its modules for as long as you keep your subscription.
Like other ERP software, SaaS ERP allows you to track and manage the following business functions:
- Customer relationship management (CRM)
- Inventory management
- Spend management
- Human resources
- Project management
Is SaaS ERP Different than Cloud ERP?
If it walks like a duck, looks like a duck, and quacks like a duck, it’s a duck.
There are some minor differences between SaaS ERP and cloud ERP systems but the difference doesn’t matter to 99% of people. Both types of ERP use the internet to store data and enable computing processes related to enterprise resource planning.
Both system types allow you to rent services and infrastructure, giving you access to a fully functional application in exchange for a licensing fee or subscription.
Most tech professionals use the terms SaaS and cloud interchangeably, so I’ll also use SaaS and cloud to refer to the same type of ERP software.
Differences from On-Premises ERP
On-premises ERP refers to an ERP system that’s locally hosted within a firm’s own tech infrastructure. On-premises has been the default delivery method for the system for a long time, as many companies switched to it before cloud-based ERP was around; implementing a new ERP system is often a huge task to undertake, requiring months or years and a dedicated consultant.
While the switching cost is extremely high, on-premises ERP systems are likely a worse option for most tech businesses.
SaaS ERP software solutions offer the same functionality as on-premises software - but with additional benefits. These are just some of the ways a SaaS ERP product can help you meet your business needs.
Lower Upfront Costs
With on-premises solutions, you have to pay for servers and other equipment upfront, increasing your expenses. If you work for a small business or midsize firm, you may also need to hire additional IT personnel to install, maintain, and troubleshoot an on-premises system. Depending on what type of ERP you choose, you may even have to reconfigure your network infrastructure, which only adds to the cost of implementation.
With a cloud-based ERP, there’s no need to purchase additional computers and servers. Everything resides on the ERP service provider’s equipment, making it extremely affordable to get your new ERP system up and running.
Quicker Updates & Enhanced Scalability
In the “good old days,” you had to spend money every time a software provider released a new version of its products. Microsoft Office is probably the best example. If you wanted the latest features of Word or Excel, you had to purchase new installation disks, making it more expensive to run your business. Some companies had to miss out on these features due to budget constraints, making it more difficult for employees to do their jobs.
Cloud ERP solutions make it easy to access new software features and scale your ERP according to your business needs. Instead of having to purchase new software every time there’s an update, your SaaS subscription gives you access to regular upgrades. Additionally, if your business grows rapidly, you can change your plan immediately, giving you access to more software licenses.
On-premises solutions reside on local machines, so you have to be at the office to use them. In today’s fast-paced business world, many employees work remotely. You may also have team members travel to other states or countries to meet with prospective customers, participate in trade shows, or give presentations at professional conferences. If you have an on-premises ERP system, none of those employees can access it when they’re out of the office.
Cloud ERP software completely eliminates this problem. The cloud deployment model makes it possible to access ERP software from any device with an internet connection. Employees can log in from their home offices, get real-time reports from the conference center of a hotel, or download data on their mobile devices when pitching products and services to potential customers. As a result, there’s no need to worry about productivity declining every time someone is out of the office.
For example, companies that specialize in agricultural products see business travel as a way of life. If you’re using on-premises ERP, salespeople can’t log in and access current information on pricing and product availability, making it more difficult to tailor their pitches to each prospective customer. If you have a cloud-based system, those same salespeople can access real-time information from a laptop, tablet, or smartphone.
Cloud ERP software gives you access to a fully functional application. You don’t have to worry about hiring developers or downloading multiple apps to create some semblance of an ERP system. Each software package has a user-friendly interface and straightforward navigation features. Typically, anyone with a little experience can quickly get up to speed on the basic features of an ERP system.
Oracle NetSuite has features designed to walk users through each process. Even if one of your employees has never used an ERP system, they can use the on-screen prompts to get up to speed quickly.
Easier ERP Implementation Process
Because you don’t have to purchase new equipment, hire new employees, and install the software on local machines, it’s much easier to implement a cloud-based ERP system. Therefore, adopting a cloud solution increases efficiency and makes it much easier for employees to be productive. Many companies, including SAP and Oracle, also have customer onboarding programs to ensure that everyone understands how to use the software effectively.
Versa Cloud ERP offers several resources to help new customers succeed with its cloud-based ERP solution. Its onboarding guide has 16 steps, ranging from product configuration to user creation. Users also have access to webinars, a full-featured knowledge base, and other tools to help them gain confidence in using the software to manage ERP functions.
Finally, cloud ERP is much more flexible than on-premises ERP. With an on-premises solution, you’re limited by your server capacity and the number of licenses you have. As your company size grows, you may have to waste time searching for a new solution or updating the existing one. If you sell off part of the company, there’s no way to remove capacity without wasting time and money.
With cloud-based ERP systems, these problems are a thing of the past. You pay for only as many licenses as you need to run your business, keeping your expenses as low as possible.
For example, a tax preparation company could purchase additional licenses to use between January and April of each year. Once tax season is over, they can downgrade to a plan that has just enough licenses to get through the slower months, saving a substantial amount of money.
Capabilities & Use Cases
Cloud-based ERP systems are extremely valuable for growth-stage CFOs. Every CFO has to make tough calls about risk management and capital leverage, but you can’t make good decisions if you don’t have access to updated information about your business. Cloud ERP systems give you real-time insight into what’s happening in your company, from how much inventory you have on hand to how much money you spent on widgets last month.
Implementing a cloud ERP system also reduces the risk of errors and eliminates inefficiencies. When you use separate software for accounting, financial management, human resources, project management, and other business functions, it’s easy to make mistakes when transferring data from one system to another. It also takes time to transfer data — time that could be better spent making strategic decisions and advising your company’s chief executive.
Cloud ERP software even makes it possible to automate many finance processes, leaving CFOs and their employees with more time to focus on the big picture. Instead of searching for updated data or struggling to make sense of information from multiple systems, you can test different variables and see how each one is likely to affect the success of the company.
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. Once you master your new ERP system, head to The CFO Club to learn more about how technology intersects with finance. Once you’re there, subscribe to our newsletter to receive useful tips and inspiring articles on how to become a leader in the finance industry.