Should you move to SaaS ERP? Top factors to consider

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Although SaaS ERP holds the promise of agility for many companies, understanding the nuances of migration is critical. Here are six areas to consider.

SaaS ERP- SaaS ERP offers a number of benefits, but whether cloud is the right choice for a particular organization is another matter.

A lot of the coverage around SaaS ERP makes it seem like every organization is moving to the cloud. And while it is true that cloud technology has become increasingly popular, especially since the pandemic began, the decision about whether to move to SaaS ERP can be a tricky one, especially for larger organizations. Organizations need to consider all the factors.

Deciding whether to move to SaaS ERP requires considering factors such as the risk of moving mission-critical customizations of an on-premises system, the ongoing costs of SaaS and the vulnerability of relying on vendor support.

Business and IT leaders may consider the cloud because it offers easier updates, increased agility and less infrastructure headaches, said George Burns, senior cloud consultant at SPR, a digital transformation consultancy located in Chicago.

“There are several advantages for organizations to migrate to a SaaS-style ERP that can offer efficiencies to your business, beyond just IT,” Burns said.

As with all SaaS products, costs are operationalized, which eliminates the need for capital investments in platform upgrades and maintenance, he said. Organizations can use SaaS software without needing to maintain the underlying platform.

Business and IT leaders often casually mull a transition to the cloud before seriously considering SaaS ERP, said Tarun Vaid, lead analyst with ISG, an IT advisory group located in Stamford, Conn. However, COVID-19 pushed many companies to accelerate the adoption of cloud IaaS services to improve resilience and support work-from-home models for users and IT staff. On the heels of that, some have also considered or decided on a move to SaaS ERP instead of moving their legacy ERP to an IaaS service in the cloud.

One obvious benefit of moving to SaaS ERP is that IT no longer deals with the complexity of managing infrastructure, testing upgrades before deploying and patching security breaches, Vaid said. However, it’s the agility to innovate and react to market changes SaaS ERP brings that often plays a deciding factor in putting SaaS ahead of on-premises or IaaS-based ERP. This has become even more important as enterprises look for ways to improve visibility and course correct in response to the pandemic, trade wars, political unrest and adherence to changing compliance standards and tax structures.

“SaaS ERP enables automation, agility and speedy recovery to meet human trends rather than technology trends for providing higher customer experience across multiple channels,” Vaid said.

Here are some possible issues business and technology leaders should consider related to SaaS ERP.

Extent of current customizations

A move to SaaS ERP poses more risks to organizations with mission-critical customizations in their current ERP.

Larger enterprises that have invested in custom developments to extend their ERP functionality are more likely to have this issue, Vaid said. The best strategy is to find a way to refactor these legacy customizations as APIs connected to the ERP SaaS. The process is costly, particularly for more complex customization, but the upshot is this can improve overall modularity of the function, increase flexibility and enable faster change.

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