Upgrading your ERP: Is SaaS the answer?

Upgrading your ERP Is SaaS the answer

SaaS is now the default choice for many business applications, including CRM, HR, and procurement. Rather than maintain the infrastructure needed for on-premise hosting—and deal with the inconvenience of upgrades—with SaaS solutions you simply pay a recurring fee and access your ERP using a web browser. 

Sounds great – but is it the true story?

In this series, we’re looking at the five main options organisations have when deciding the future of their ERP systems:

  1. Migrating their ERP to the cloud
  2. Switching to a SaaS solution
  3. Switching to a different ERP vendor
  4. Upgrading their ERP to the latest version
  5. Sticking with their existing ERP system

Today, we’ll focus on option #2: SaaS. Is it really as great as the big ERP vendors would have you believe?

What’s the deal with SaaS ERP?

Both SAP and Oracle have been heavily promoting their ERP SaaS products (SAP S/4HANA Enterprise Cloud and Oracle Cloud Platform ERP) for several years. SAP, in particular, are so keen to move customers to their SaaS platform they have set a 2025 end-of-support deadline for non-cloud products to hurry their customers along.

But whether SaaS is right for your organisation is a bit less cut-and-dried than the big ERP vendors would have you believe. SaaS offers many—but crucially, not all—of the same capabilities as traditional ERP solutions, while removing the need to manage on-premise hosting infrastructure.

If your vendor’s SaaS product has all the functionality you need, it just might be right for your organisation. But if it doesn’t… well, you get the idea. Just make sure you know for certain what you’re getting into.

Why Choose SaaS?

SaaS ERP solutions have two primary benefits:

  1. You’ll always have the latest version
  2. All risk and responsibility for security and maintenance is transferred to the vendor

With SaaS ERP systems, vulnerabilities and bugs can typically be patched more quickly than on-premise, and if necessary, data can be located in specific regions to meet regulatory requirements. SaaS also enables users to access and manage information using their smartphone, tablet, or personal laptop, making remote working a simpler process.

But SaaS isn’t without its downsides.

While it may seem the best option to reduce costs, this isn’t necessarily the case. SaaS ERP pricing is per-application and per-user, and the total cost of ownership often ends up higher than the combined costs of licensing and hosting on-premise. If for any reason you need additional user licenses later on, the extra cost will be significantly higher under a SaaS pricing model. Not only that, but you also need to consider the substantial costs of migrating to SaaS in the first place (one study by Forrester estimating the average implementation to cost $877,000).

Also, despite how it’s promoted, SaaS doesn’t completely remove the need for on-premise solutions. Not all ERP applications are available as a service (and the ones that are do not allow for customisations your organisation might need), and many SaaS offerings are less advanced than their on-premise alternatives. Many organisations will still need to maintain some systems on-premise, which must be integrated with their SaaS ERP. This process is complex and can take months or even years to complete.

Finally, and perhaps the most important, remember that by switching to a SaaS solution you are effectively buying your system again from scratch and abandoning any previously purchased licences you have that were ‘in perpetuity’.

Moving to a SaaS ERP Solution

Advantages Disadvantages
Software updates are automated.
Support and security are taken care of.
No need to maintain in-house infrastructur.
No control over updates.
High total cost of ownership.
Not all features available in cloud offerings.
No support for customisations

What about support for SaaS ERP?

With SaaS ERP, organisations have little choice but to pay for expensive vendor support programmes. In many cases, support fees are bundled into recurring costs, with no option available for third-party or self-support.

While vendors like to present SaaS as the most attractive option available—soon to be the only option in the case of SAP—strong alternatives are available. It is possible to retain your existing on-premise or cloud ERP solution while also benefiting from superior quality, lower-cost support from a third-party provider.

Ultimately, you may decide to adopt SaaS ERP. But such decisions can take years to make, and they don’t need to be made now. While you’re deliberating, switching support for your existing ERP to a third-party provider can yield substantial savings, which can be banked to pay for future transformation projects.

Upgrading your ERP: Assessing your options

The prospect of upgrading your ERP system probably doesn’t fill you with joy. In fact, if we had to guess, we’d say it more likely fills you with dread. So if you find yourself in the position of assessing your options, we want to help.

Recently, we published a guide designed to help organisations make informed decisions about the future of their ERP systems.

So if you find yourself…

  • Worried about falling “out of support” if you don’t stay on the latest version
  • Receiving pressure from your ERP vendor to move to their SaaS product
  • Wishing you could stick with your current, stable ERP… but unsure if that’s a viable option

…we can help.

If for any reason your organisation is considering upgrading, moving, or switching up its ERP system, this guide is for you.