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ERP as SaaS Maturity indicator



I recently read Tien Tzue's post titled The End of ERP. As usual, I suspect the validity of statements beginning with the End of ... without a question mark in the end. Tien Tzue's statement is not an exception.


According to Tien Tzue there is a shift from 20th century products based economy to 21th century Service subscription economy, therefore ERP is doomed. He refers to the acquisitions of Cloud ERP solutions companies, Successful Factors by SAP and Taleo by Oracle, as an End Of Life signs of traditional ERP.  


No ERP company can afford to ignore Cloud based ERP, but that does not mean that SAP, Oracle and other traditional vendor, are going to kill the goose who lays golden eggs i.e. their traditional On-Premise ERP suits.


SaaS based ERP is a better fit for some enterprises and Traditional ERP fits better for other enterprises.


Three years ago I already discussed the issue of Future Applications: SaaS or Traditional.  
Basically it is a tradeoff between Maturity and Robust Functionality (Traditional On-Premise ERP suits) and Agility (SaaS based ERP suits).


What was changed since 2009?

  • Many SaaS ERP vendors instead of few
Three years ago SaaS ERP suits vendors list includes NetSuite and SalesForce.com and few other vendors offering single or few components e.g. Workday HR and many CRM only vendors. 


Today  SalesForce.com  and Netsuite are still the dominant vendors, but there are many other full SaaS ERP suits vendors.
Workday is no longer an HR only vendor. The SaaS ERP Suits vendors list includes:  Infor, Intacct, Epicor (Architecturally, it is my favorite due to its innovative approach and full SOA support) etc.      

  •  SalesForce.com and Netsuite are the "SAP" and "Oracle" of the SaaS based ERP market.
 The approaches to ERP of these relatively giant rivals are different.
Netsuite nickname is "Little Oracle". The nickname is dew to Netsuite's investor Larry Ellison, the similar Corporate Cultures and a lot of past Oracle's employees employed by Netsuite.
Netsuite is building a full SaaS ERP suite.


Saleforce.com, the leading SaaS CRM vendor, is building an ERP PaaS environment named Force.com Development Environment. SaaS ERP vendors such as Infor use it for developing their products and are Salesforce.com's Value Added Resellers (VARs). 
I will not be surprised if SalesForce.com will acquire one of these resellers.   

  • Growing SaaS ERP market share
SaaS Continues to get Traction. According to Panorama Consulting Solutions, 6% of organizations implementing ERP in 2009 were deploying SaaS options. This number was nearly tripled (17%) in 2010.  

  • SaaS ERP is not adequate yet for Large and Complex Enterprises.
The result is that most of the SaaS ERP implementations are in the SMB market. On-Premise ERP is still dominating Large Enterprises. 


My Take
The patterns of SaaS ERP adoption are a major indicator of SaaS Maturity Level. 
If and when, most large and complex enterprises will deploy SaaS ERP then it will reach high Maturity Level. 


The future deployment by Large Enterprises cited above, should include all, or at least, most Core ERP components. Currently, Large Enterprises implement SaaS CRM and SaaS HR, but most frequently use On-Premise Traditional ERP for core components implementations.


Only when SaaS Maturity will reach this high level, we can start dwelling upon The End of Traditional ERP.
In my opinion it will take a long time.    


Read the original blog entry...

More Stories By Avi Rosenthal

Ari has over 30 years of experience in IT across a wide variety of technology platforms, including application development, technology selection, application and infrastructure strategies, system design, middleware and transaction management technologies and security.

Positions held include CTO for one of the largest software houses in Israel as well as the CTO position for one of the largest ministries of the Israeli government.

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