Page 52 - MetalForming April 2015

Software-as-a-Service ERP
Fig. 4: Distributed Environments are the Norm
64% have more than one location served by ERP
Number of
operating locations 6.7 served by ERP 5.4
2.1
Small Lower
Mid Mid
13.6
Upper
Large
Source: Mint Jutras 2014 ERP Solution Study
The software equivalent to proper- ty taxes is maintenance. However, there are some notable differences between real estate and software. Maintenance fees and the software delivered as a service are governed by contracts. When selecting a provider, look at the historical escalation of costs. You may even want to negotiate a limit to allow- able price increases.
Preserving Your Investment
Second only to total cost of owner- ship, 42 percent of respondents includ- ed the reduced cost and effort of upgrades as an advantage to SaaS. And yet, at the same time, a relatively small percentage (18 percent) expressed the concern that they were losing control. In a multi-tenant environment, the customer typically has little control over the timing of upgrades.
In many cases, “we want to control our own upgrade process” actually translates to “we don’t have time” or “we don’t want the disruption of an upgrade.” Yet by not keeping current on the latest release of the software, companies are letting their maintenance dollars go to waste. In a SaaS environ- ment, those would be subscription dol- lars. Even though upgrades at first might feel like a forced march, that forced march actually is a good thing. All bug fixes and regulatory requirements are in place. When a user is ready to turn on the new functionality, it will be there.
If innovation is delivered in such a way that the customer may choose to take advantage of an enhancement—or not—there is no downside and much upside, as the SaaS solution provider assumes a large share of the burden of the upgrade process.
More innovation should be a sig- nificant benefit of a SaaS-based deliv- ery model. The availability of more leading-edge technology through more frequent updates was cited by only 26 percent of survey participants. While this percentage indicates that this potential benefit is under-appreciat- ed, Mint Jutras also recognizes that the pace of innovation varies quite signif- icantly from vendor to vendor. Those
who offer their product exclusively as a multi-tenant SaaS solution have a dis- tinct advantage of only having to main- tain a single line of code.
On the other hand, solution providers delivering on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of platforms and databases, and the vendor must support multiple release levels determined by their customers’ ability to keep pace with upgrades. For every person-day spent on innovation, another multiple of that day is spent ensuring it works across multiple environments. Products offering the same solution as either SaaS or on- premise must accommodate these choic- es, while those offering a multi-tenant SaaS solution can devote their entire development budget to innovation.
Customization
Heavily customized solutions may prevent companies from keeping cur- rentonthelatestreleaseofERP.Atthe same time, perception of the need for customization may present a barrier to considering a SaaS solution. In fact, 19 percent of survey respondents indi- cated that the requirement for heavy customization would prevent them from considering SaaS.
First of all, don’t necessarily assume that you can’t customize a SaaS ERP solution. Most modern ERP products offer so many options to configure and tailor the solution that users think they are performing customizations, even though they are not touching the code or building barriers to future upgrades. And, if the requirement does truly require code modification, some (but not all) SaaS vendors, even some that provide multi-tenant solutions, do indeed support customization.
In addition, while many individuals may believe that their business is unique, thus making customization necessary, much of what they do can and should be quite similar to any other business. Perceived differences often spring from the “we’ve always done it this way” mentality. And those supposedly unique business processes may pre-
date the availability of tools and tech- nology that can improve the process.
But if you truly require heavy cus- tomization, then it may be time to reevaluate whether you have the right solution for the job at hand. In select- ing ERP, fit and functionality always has been the top priority, as it should be. Our survey respondents ranked this criterion at the top of the list at 4.38 on a scale of 1 to 5, where 5 is “extremely important.” But in 2014, “ease of use” was virtually tied for number one, rated just barely ahead at 4.39. These two criteria should go hand-in-hand. All of the functions in the world are useless if you can’t figure out how to use them.
For those with existing ERP solu- tions that require continued support of heavy customization, it may be time for a replacement and SaaS can help pave the way. While it still may require major surgery for your company, recovery may be speedier with a SaaS ERP- replacement solution. Survey respon- dents with SaaS implementations reached their first go-live milestone 19 percent faster than those with on- premise solutions.
There is still the perception among some survey respondents that SaaS ERP solutions do not offer the same level of robust functionality that on- premise solutions provide. But that perception is shrinking; only 15 percent of survey respondents selected this as a concern. Indeed some of the SaaS- only ERP solutions are quite mature and some very mature solutions that were previously only available as on-
50 MetalForming/April 2015
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