Page 49 - MetalForming April 2015

Fig. 1: ERP Deployment Options Considered Today
60%
40% 20% 0%
2011 42%
53%
2013 46%
2014
20%
56%
45% 48% 46%
Software as a Service (SaaS)
43%
ERP hosted and managed by your ERP vendor
ERP hosted and managed by an independent third party
Traditional licensed on-premise
26%
27%
17%
Source: Mint Jutras 2014 ERP Solution Study
Fig. 2: Deployment Options Considered by Company Size
60% 40% 20%
0%
30%
46% 48%
34% 32%
Traditional licensed on-premise
Small
50% 53% 54%
41% 39%
Lower Mid
57% 51% 45%
Upper Mid Large
15% 18%
18%
Software as a Service (SaaS)
ERP hosted and managed by your ERP vendor
ERP hosted and managed by an independent third party
Source: Mint Jutras 2014 ERP Solution Study
specifically because many consider- ing a SaaS solution find the ability to move freely between a SaaS and on- premise environment very appealing. However, once the move is made to SaaS we find little, if any, interest in reversing that decision.
Companies are more likely to take advantage of this type of portability in their transition to the cloud. If a cur- rently installed ERP solution is available as both SaaS and on-premise, it may be possible to lift and shift an existing on- premise solution to a SaaS environ- ment. This largely depends on the level of customization of the existing solu- tion and the SaaS solution provider’s policies and ability to accommodate those customizations.
Cost Considerations Make Case for SaaS
When our 2014 survey respondents were asked what they found appealing about SaaS ERP, cost factors rose to the top of the list. While 50 percent cited lower total cost of ownership, 47 percent also noted lower startup costs.
A full 34 percent of our survey respon- dents mentioned the lower (or nonex-
istent) cost of information technology (IT) staff as an advantage of a SaaS solu- tion. Many don’t have the internal staff they feel is required to adequately sup- port hardware, infrastructure and soft- ware, and are not interested in investing in these resources. And many find them- selves as not being able to attract or retain top IT talent.
This belief shot to the top of the list of benefits for those already deployed under a SaaS model, with 61 percent of respondents identifying no need for IT staff as one of the “appeals of SaaS.”
While 12 percent did indicate that they already had invested in IT and were unwilling to reduce staff, in real-
ity it is the norm for these IT staffs to remain on board after a switch is made from on-premise to SaaS, and more strategically focused on adding value to the business.
While the perception of lower costs was quite dominant, in our survey 17 percent of respondents expressed that they did not feel SaaS was any less expensive. In fact, some industry observers will confirm this belief citing the “rent versus buy” mentality and will point to break-even points in 5 to 7 years. However, these calculations only take into account the cost of the software and maintenance, and often ignore the cost of the hardware and middleware (i.e., database and infra- structure) that support the applica- tion, as well as the IT staff needed to maintain it.
Certainly, if ERP is the only applica- tion that moves to the cloud and other applications remain on-premise, hard- ware (and IT staff ) still will be required. However, the power and storage capac- ity needed will be reduced in your next upgrade, after removing ERP. “No need to purchase and maintain hardware” was the second most commonly cited ben- efit for those already deployed as SaaS.
One final cost concern: escalating costs over time. Using the same rent- versus-buy analogy, long gone are the days of rent-controlled apartments. You sign a lease and take your chances that the landlord will not raise the rent through the roof at the end of the lease term. But once you make a purchase of a condominium or a house, there are no guarantees that your taxes won’t escalate out of control either.
Fig. 3: Deployment Options Considered by Current Deployment
79%
Software as a Service (SaaS)
80% 60% 40% 20%
0%
SaaS
41%
Not SaaS
42%
50%
48%
20%
11%
10%
ERP hosted and managed by your ERP vendor
ERP hosted and managed by an independent third party
Traditional licensed on-premise
Source: Mint Jutras 2014 ERP Solution Study
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