Why Manufacturers Say They Want SaaS ERP, But Really Mean Cloud ERP

Learn the differences between Cloud ERP and SaaS ERPWhen consulting with prospective manufacturers, a conversation about their preferred deployment method always arises. There are three common delivery choices available on the market today (on premise, hosted or a hybrid of the two), yet some of our prospects mistakenly answer: Software as a Service (SaaS). Since the question isn’t how the customer prefers to license his software, but rather where he wants to store his data, I know that we need to have an in-depth conversation about what SaaS is, and what it is not. Because a hosted solution in the Cloud is not SaaS, even though they are commonly lumped together.

I begin by asking, “Why? Why do you want a SaaS environment ERP and MES solution?” Manufacturers typically offer reasons that include avoiding the headaches associated with buying a bunch of hardware and maintaining those servers with IT staff. Our prospects discuss requiring access to their data from anywhere without having the hardware onsite to maintain and manage. Typically, the reasons mentioned are in support of a hosted Cloud option, not a SaaS system. A common misconception!

In short, Software as a Service is the concept of leasing all the technology you need from a third-party vendor. A common analogy is the idea of renting an apartment (SaaS) versus owning a home (on premise). Everything, from the hardware to the software to your data, is outsourced to a service provider and you pay for access to it on a monthly subscription basis. SaaS is accompanied by two common concerns: data accessibility and the security of that information. If you are renting your data, you do not own it, and horror stories are not uncommon about manufacturers who suffer because their data does not belong to them.

The good news is you can own your data and pay an annual maintenance contract, but still be in the Cloud on a hosted solution. In most cases, rather than SaaS, manufacturers are actually searching for Infrastructure as a Service (IaaS) capability. IaaS is the outsourcing of your hardware, operating system and middleware to a third party for control and maintenance, but not your ERP software and data.

IQMS calls it software portability. This way, you own the software and you can move it around to any service provider you want. For example, for the size of your company now, a hosted solution makes perfect sense. But in three years, your company may have expanded to the point where it is smarter and more cost efficient to bring everything onsite. With SaaS, you can’t just bring your data in house. It doesn’t belong to you.

IQMS’ ERP and MES software solution, EnterpriseIQ, can be served up any way the customer would like (hosted, on premise or hybrid). While our solution is commonly installed on premise, many of our manufacturers have contracted with a third party like Rackspace, Acendex or Amazon Web Services to host their purchase of EnterpriseIQ. Looking for even more support? IQMS offers a program called Managed Services, where IQMS will maintain your database and provide upgrade support and optimization, delivering the benefits of SaaS without the risks.

What is the best part about a more versatile ERP solution? Our manufacturers can have everything they want (no hardware maintenance or IT staff, but complete control of the data) at a lower price than a SaaS ERP solution. Studies by Gartner have shown that over a five year period, total cost of ownership is higher with a SaaS solution than with an annual maintenance contract.

Your ERP solution deployment method should not be limiting. EnterpriseIQ can be installed on premise, hosted by a third party in the Cloud or a combination of the two as your company grows and changes. It is up to the customer to decide the best approach on how their ERP and MES solution is delivered, not the ERP vendor. In the end, the question that should be asked is not, “Why do you want a SaaS system,” but rather, “Do you want to rent your ERP software and data or own it?”

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This article was written by
Steve Modrall
Website: IQMS

Steve Modrall, IQMS Senior Account Executive, has more than 15 years of quality software and manufacturing experience under his belt. A RABQSA Lead Auditor, Steve previously worked at the quality management software company, Powerway Inc.