ERP The Way of the Dodo?
Updated: Aug 28
Cloud based ERP systems are 30% cheaper than on-premise server based solutions. So it is no surprise that in the year 2018 only 15% of ERP systems were in-house. Interestingly, the same statistic shows that of the remaining 85% the vast majority, 64%, adopt the SaaS
model whereas only 21% are so called Cloud ERP. It is hence clear that there must be
something very compelling about the SaaS offering. Let’s have a look.
But before starting, there is something I’d like to make clear at the very beginning: this blog
does not replace a detailed evaluation process for the selection of a particular solution.
There are compelling arguments for both, to go for a Cloud based system or opt for an SaaS
model. However, in the following I would like to focus on the advantages of the emerging
and fast moving SaaS offering as it is the way forward in my opinion.
The problems with traditional ERP systems are well documented: project delays, cost
overruns, rigidity in the processes and vocabulary. These ERP further come with a high
degree of complexity and require extensive process changes to the existing way of doing
things. The training is thus comprehensive and tests the capabilities of any user team. The
going-live takes place in the format of a big bang and is hence risky. Taken all together,
ingredients that can lead to outright failures.
When moving on in the direction SaaS solutions at the other end of the spectrum there are
systems which are kind of ‘in-betweeners’: they reside in the Cloud but still follow many of
the traditional ERP characteristics. One such solution among other is Netsuite. Whilst these
systems’ focus is on a seamless integration they still represent the one-size-fits-all mentality
and bears the risk of varying degrees of competency in the different functional areas that it
In the SaaS world on the other hand specialized, smaller providers create solutions for
individual markets, offer continuous improvements and add new features all the time.
Given the nature of SaaS ecosystem the Company is completely in charge in deciding which
Apps to implement and at what speed. It can hence slice the introduction of an ERP in
portions and match it to the readiness of its organization.
SaaS are also having a laser sharp focus on user-friendliness. They emphasize the ‘customer journey’, a concept that is completely ignored in vast parts of the traditional corporate world. This starts with the landing page on the web, seamless transfer to the App after signin, intuitive user interfaces, extensive support sections - many of them populated with short and crisp video clips, user-based support communities, free training webinars and much more.
The continued engagement and focus is driven by the fact that SaaS are subscription
models. The realization that subscriptions can be cancelled any time guarantees perpetual
improvements. But there is an additional benefit for the subscriber. If a better solution is
emerging they are able to switch quickly and stop the subscription of a laggard without
having to face write-offs of legacy investments.
Of course, there are also problematic areas: bugs, supplier risks in terms of financial stability
(of startups) and fluctuating speed of development/improvements, differences in quality of
providers in different markets, lack of transferability of data are probably the most common
ones. A careful managing of the risk is certainly recommended given these exposures.
There has been an interesting trend in the last 3 years: SaaS solutions, that started with
addressing one particular pain point, are now expanding the breadth of their solutions
resulting in an increase in their usability. One particular trend that can be observed is the
introduction of collaboration features across different, which of course foster the support of
team work. But this development also leads to increased complexity and negates some of
the initial advantages of easy-to-use and ad-hoc deployment.
In view of this changing Apps landscape guidance and selection criteria are sometimes hard
to come by. One way to help out and to bring some organization into the chaos is for
example Xeros’ so called App Marketplace. It lists more than 600 solutions that easily
communicate with Xero and allow a seamless integration.
These Apps sometimes address pain points in singular functions such accounting (Xero
itself), financial reporting (Spotlight Reporting), POS (shopify) or HR (Talenox). Others are
solving problems across several functions such as logistics (Cin7), CRM (Pipedrive, HubSpot) as well as ancillary areas such as legal (Zegal), expenses (Expensify, Receipt Bank) or project management (WorkflowMax). Alternatively, there are also verticals where SaaS solutions or entire industries are available. Examples are restaurants (Revel), architecture WorkflowMax), or even manufacturing (Cin7).
Nevertheless, in a cost conscious corporate world the day-to-day business sometimes leaves no resources to cope with even smallish projects. As a consequence, there are now
specialized providers that have recognized that companies need help to get over the hump
of an implementation project without compromising the daily business. These providers are
nimble, proficient and experienced enough to offer services covering a multitude of SaaS
Not only does the evolving SaaS space and the emerging connected support industry
represent the future it offers already today exiting solutions for SME. Fresh Accounting for
example offers accounting services using Xero, it helps with the tailoring and
implementation of a multitude of complementary SaaS solutions that can be bolted on to