ERP systems enable businesses to integrate different functions such as order management, inventory management, HR, accounting, finance and more. A SaaS ERP solution integrates these core business functions into a single system, which streamlines flow of information and processes across the whole organization.
Different sources seem to have their own definition of ERP, while the implementation of ERPs can also vary, which is mainly because of the flexibility ERP systems provide to businesses. A shared database that is accessible to different business functions helps differentiating an ERP system from other solutions.
This means that all the connected business units get access to the same, up-to-date and accurate information. The same information is available to the accounting team as well as the HR, marketing and other connected departments.
A Brief History of ERPs
Although the roots of ERP systems go back to as far as the 1960s, the term itself was first introduced by Gartner in 1990 and applied to the manufacturing sector, particularly inventory management/control.
Initially, software developers created applications to reconcile balances, keep track of inventory and status reporting, which evolved into what was known as MRPs (Material Requirements Planning) systems by the 70s. MRPs transformed into more complex software in the 80s and encompassed many more manufacturing processes.
it evolved into Manufacturing Resource Planning or MRP-II systems, which expanded well beyond inventory control by the 90s and included back-office functions and other processes such as HR and accounting. MRPs have evolved since then and have become fully-featured systems that encompass a wide range of business processes.
Although the E in ERP stands of enterprise, ERPs are not exclusive to large organizations anymore. A growing number of medium sized and high-growth businesses are adopting the technology to streamline processes and information. SaaS as a channel for delivering software has fueled its growth and the benefits and challenges of implementing a SaaS ERP are almost the same as benefits and challenges of using any other SaaS solution.
Benefits and Applications of a SaaS ERP System
The key benefits of using a SaaS ERP system include much lower upfront costs, easier implementation and management, real-time reporting and business intelligence. ERPs provide more visibility into different business processes and an important tool that helps executives in the decision making process. SaaS ERP solutions are designed to break inter-departmental barriers and improve efficiency and productivity.
Modern ERPs can give businesses a competitive advantage and help them improve staff performance, customer engagement and find new business opportunities. ERP system providers have been incorporating new capabilities into their systems such as AI and machine learning. Key benefits of using a SaaS ERP include:
- 360° Business view
- Real-time process monitoring and production
- Business process standardization
- Improved product quality
- Shorter lead times
- Quicker design changes and schedule adjustment
- Business and manufacturing intelligence
- Simplified mergers and acquisitions
- Increased adoption rates
- Intuitive user experiences
- Improved efficiency and performance
- Streamlined processes
- Single source of truth for all the connected departments
- Highly scalable and flexible
- Enable businesses to expand globally
- Improved regulatory and financial compliance
- Automation of core business operations
- Enhanced employee and customer experience
- Seamless integration with other systems
- Accurate forecasting
- Customized reporting
Who Should Invest in a SaaS ERP System?
Although ERPs encompass a wide range of business processes and functions, manufacturing, supply chain, finance and human resources remain the key business processes. Investing in an ERP system is a no-brainer for growing businesses that are struggling with their legacy systems. Here are the three key factors that can influence the decision:
- The basic or legacy systems are limiting business growth and making it difficult to grow globally and expand to new markets
- The systems already in use are not working well together/incompatible, which leads to data duplication and even more work for team members. Trying to stitch different solutions together can take a lot of time, effort and reduce efficiency
- The existing systems are not able to accommodate mobile staff members and customers. Businesses need specialized tools to meet customer expectations and provide team members with the tools they need to succeed
Things to Consider When Choosing Between Different ERP Solutions
With so many systems to choose from, it might seem difficult to pick the right solution. However, there are only a few viable options that can fit the criteria. For example, large enterprises are looking for solutions such as Oracle Cloud and SAP S/4 HANA, while medium sized businesses often have solutions such as Sage X3 in mind.
That’s why it’s better to spend more time on ERP implementation instead of spending a lot of time on evaluation because great implementation can outweigh the cons of selecting an imperfect solution. Implementation includes business process management and change management, which play a critical role in the success of an implementation strategy. The key factors to consider when choosing between different ERP solutions include:
- ROI and TCO
- Adoption rate
- Ease of implementation
- Flexibility and scalability
- Depth/breadth of functionality
- Integration with other systems
- Overall viability and product roadmap
- Ease of transition including training and change management
- Vendor ecosystem strength
Top 5 SaaS ERP Systems
In the IT world in general and the SaaS world in particular there isn’t anything like a perfect solution for everyone. Businesses have different requirements and working environments, so one solution that works perfectly for one might not work well for another. That’s why it’s so important to do some homework and match your requirements with what a particular solution has to offer. Here are our picks for the top 5 ERP solutions.
Oracle Net Suite and Oracle ERP Cloud
Both solutions are offered by the same parent company (Oracle acquired NetSuite) and some businesses might find it confusing to choose between the two. That’s why we have included both to give an objective comparison, which can help make an informed decision. NetSuite has been a cloud-native product for more than 20 years and is considered to be a more functionally and technically mature product. On the other hand, Oracle ERP migrated to the cloud fairly recently.
Oracle ERP offers greater flexibility, mainly because it has been an on-premises solution for so long and offers tools such as PaaS and integration with 3rd-party apps. Being an established SaaS solution, NetSuite is not as flexible, which means businesses cannot customize it too much to fit their requirements. NetSuite is better at running business processes that are repeatable and common, while Oracle ERP works well for businesses that need deeper customization and integration.
Businesses that don’t want deep customization options find NetSuite a better option, while Oracle ERP is designed to be more flexible and suitable for enterprises that have the resources to deal with complex customizations. As far as implementation and integration partners are concerned, Oracle ERP is more robust and has a head start. Similarly, NetSuite users are already using a cloud-based product so they are not going to face the challenges associated with transitioning from an on-premises solution.
NetSuite takes the lead when it comes to customer adoption rate. Most users of the legacy Oracle systems seem content on using the old system. NetSuite is especially popular in small and medium businesses because it’s a native SaaS solution with a higher adoption rate.
Key features (Net Suite)
- Automation of back-office and front-end processes
- Financial management
- Order management
- Revenue management
- Fixed assets
- Inventory management
- Audit trail visibility
- Workflow management
- HR and Payroll
- Fraud prevention
- Centralized vendor management
- Manufacturing routing
- Tax management
- Financial reporting
- Routing and approval
- Access levels
SAP S/4 HANA Cloud ERP
The solution is available as SaaS, private cloud as well as an on-premises ERP system and is derived from the SAP HANA in-memory database. Each deployment has its own pros and cons, but 26 industry-specific solutions ensure that businesses get the specialized tools they need to grow in today’s ultra-competitive markets.
AI, embedded analytics, RPA (Robotic Process Automation) and machine learning are part of the package as well as a software developer kit that allows creating custom extensions, apps and vertical solutions. The ERP is primarily designed for large businesses, but also works well for medium-sized, high-growth businesses.
The core capabilities include supply chain management, financial management, production planning, asset management, contract management, procurement and more. Its financial management capabilities remain its main strength, while long implementation cycles are its main weakness.
SAP Business One is another solution for small and medium businesses offered by the same parent company. It provides users with a centralized place to store data and provides auditable and reliable transaction data. However, the solution might be too complex for businesses that revolve around an inventory-less or simple selling structure.
- Runs on the in-memory database
- Industry-specific solutions for 26 verticals
- Intelligent automation using RPA and AI
- Embedded analytics
- Digital assistants and conversational interface
- Capabilities include finance, manufacturing, supply chain, R&D and Engineering, Sales, Professional services, Procurement, Asset management, health and safety risk management, service agreement maintenance and more
- Procure-to-invoice and Invoice-to-pay
- Treasury management
- Real-estate management and facilities
- Financial planning and analysis
- Real-time advanced analytics
- Consumer-level UX across devices
Microsoft Dynamics 365
The SaaS solution works well for businesses that expect rapid growth and want a flexible system that can scale as they grow. Increased customer adoption, flexibility, integration with other systems and customizable workflows optimize ROI and mitigate implementation risk. However, the solution falls behind other solutions when it comes to partner resellers. Many of the resellers are not fully qualified, which makes implementation more complex and difficult than it should be.
Built on the Microsoft technologies, D365 allows businesses to respond in real-time to customer needs and market environment. D365 provides ERP capabilities through different business apps, including supply chain management, manufacturing, distribution, finance, operations and retail. Businesses can get started with only the app they need to improve processes, gain valuable insights and keep customers satisfied. They can later add more apps as they grow or when needed.
- Finance, retail, HR management and supply chain management
- Built-in intelligence tools
- Adaptable apps
- Cortana Intelligence
- Power BI
- Predictive models
- Built-in setup wizards
- A familiar interface
- Preconfigured templates
- Deep integration with MS Office
- User-based and predictable licensing costs
- MS offers a complete stack with Azure including infrastructure, platform and apps
Although not as mature as other options, Sage X3 is a competitively priced and solid solution for mid-market distribution and manufacturing businesses. It can be seen as a cost-effective and low-risk alternative to top tier ERP solutions such as Oracle ERP Cloud and SAP S/4 HANA. Sage is not trying to be everything to everyone and is more focused on small-to-medium-sized businesses.
Although it can handle complex supply chain and manufacturing needs to some extent, it has its own limitations and can struggle with large-scale clients such as businesses with global operations and supply chains. It supports a wide range of verticals, including process manufacturing, food and beverage, discrete manufacturing, distribution, services and chemicals.
- Production management
- Supply chain management
- Financial management
- Budgeting and accounting
- Financial data models
- Fixed and franchised asset management
- Business analytics
- Mobile web apps
- Administration and support
- Project management
- Time management
- Interactive graphical processes
- Electronic document exchange
- Cloud connectivity and integration
Salesforce can be a lot more than just a CRM and can also work as an ERP system for SMBs. Users can take advantage of a variety of 3rd-party apps/add-ons (e.g. Rootstock and FinancialForce), connect them to the Force.com platform and turn a CRM into a fully-featured ERP.
However, this can add to the complexity associated with implementing an ERP and might not be a suitable solution for organizations that lack the required technical resources. In order to get everything working, businesses need a sophisticated and experienced IT team, but you get both a CRM and an ERP without having to spend loads of money on them separately.
- Benefits of both a CRM and ERP
- com allows businesses to build ERPs around Salesforce
- Rootstock and other developers provide ERP/MRP modules
- A cost effective for medium-sized businesses
- A wide range or ERP apps are available in the appexchange store
Although most businesses use some kind of operations and finance management software, these legacy solutions have their own limitations and can even hinder future growth. Businesses need a system that can keep up with their growth and customer expectations. ERPs bring different processes and systems together and allow different departments to access information and collaborate using a single system. Its also important to find the right talent, such as people with a masters in engineering management, to help successfully implement a solution.
All the SaaS solutions covered above are strong, but also have their own weaknesses and strengths. Businesses have their own priorities and requirements, which makes it difficult to recommend one system to all. An objective selection process should take business strategy, needs and model into account when engaging in software selection.