Cloud-hosted ERP vs. SaaS: Which Choice is Right for You?
Not all cloud ERP alternatives are the same. Your costs and choices are impacted by how your cloud ERP solution is hosted and managed, whether it’s a single tenant ERP hosted on a cloud server, or a multi-tenant ERP offered as a SaaS (Software as a Service) model. Which choice is right for your company? Well, that depends on what you need from your ERP.
Single Tenant Cloud ERP
What it is: The ERP is hosted on a cloud server and access to the application is available through an active internet connection. Such web-based ERP is set up as single tenant, meaning that the business has its own virtual application and database servers.
Advantages: Single tenant web-based ERPs hosted in the cloud can offer significant cost savings to an organization by eliminating on-premise hardware and hardware management. Additionally, there is much greater ease in scaling infrastructure to meet increased or decreased business needs. Servers and database space can literally be scaled within minutes. Companies retain the same level of control over the application, including updates and customizations, as they would on-premise. There are many layers of security available for protecting application access and data storage, making this ERP hosting solution a safe one.
Keep in mind: Working directly with an IaaS (Infrastructure as a Service) provider such as Amazon Web Services gives the business access to virtual hardware. IaaS providers will offer security, maintenance and support for the virtual hardware on their side, but not on the company side. The company will have to invest in in-house IT management or will have to contract with an infrastructure partner for such support.
Also, scaling your application is still going to be time-consuming. Adding modules, software updates, and other system enhancements will require significant migration time, leading some to feel that this cloud ERP option falls short of optimal.
Who should consider it: This option makes sense for companies with very unique business verticals that must retain tight control over their ERP customization options. With a single-tenant web-based ERP, these companies achieve some of the benefits that cloud ERP provides, including greater mobility, easier business partner connectivity and some reduced IT expenses.
Multi Tenant SaaS ERP
What it is: SaaS ERP offers internet-based access to ERP that is hosted in the cloud and managed by the provider. SaaS is almost always managed as a multi-tenant application, which means that updates made by the provider to the software are available to all the clients. Fees for SaaS generally follow a subscription model.
Advantages: Cost savings and ease of adoption factor large for companies that choose SaaS ERP. SaaS ERP eliminates the need for on-premise server hardware. Initial application implementation can be greatly simplified compared to on-premise implementations. Users have flexibility in infrastructure scalability and choices of ERP modules, which can offer midsize and smaller companies better pricing options compared to on-premise ERP. Software patches and updates are made to the application automatically by the provider. Companies may have some measure of control over opting out or delaying some SaaS updates.
Keep in mind: SaaS ERP is fully managed by the provider. This means that while you may be able to highly configure your ERP to meet your business needs, if you have a very unique business vertical you may not be able to achieve certain advanced customizations or enhancements. However, what SaaS loses in terms of customization it makes up for in terms of regular software improvements and updates.
Who should consider it: SaaS ERP is a great fit for companies that do not require much software customization. Configuration options inside the ERP are typically designed to meet the needs of most customers in the provider’s target industry. Your business is also a great fit for SaaS ERP if you require
- aggressive scaling ability
- faster ERP implementation
- lower up-front costs
- reduced IT staff resources
- ease of upgrades and maintenance