I often get visitors to my blog searching for ‘hosted ERP systems’, ‘Openbravo hosting’ or ‘hosted Compiere’. One of the hottest current trends in IT is hosted, or SaaS( software as a service), business software. There are many advantages to using a hosted ERP system, especially for small-medium businesses. We cover the subject of on-demand (hosted) ERP systems in our free ERP training.
Hosting an ERP system is an idea that has been around for years. In the late 90′s, it was called ASP – Application Service Providers. These providers installed business software (CRM,ERP etc.) in their own hosting facility, and offered its customers access to the systems over the Internet, usually for a monthly subscription.
The problem back then was that the Internet infrastructure, in terms of speed, reliability and security, was not mature enough. A few years later, Salesforce.com, a CRM providers, was the first commercially successful business software vendor to deliver their application over the Internet. By that time, the trend was renamed to SaaS – software as a service, and is now part of the Cloud Computing trend.
CRM systems are much more simple than ERP systems, and are easier to offer off the cloud. Additionally, they require much less customization, and uptime requirements are leaner than those of ERP systems. These factors make hosting an ERP system a more challenging issue.
ERP system hosting advantages
- Lower TCO – the main selling point for SaaS ERP is lower costs. You do not have to buy any dedicated servers, storage, backup systems, security infrastructure, worry about upgrades and hire experienced (thus expansive) IT professional. SaaS software is a great example of the huge impact the trend of outsourcing had on the way businesses are run.
- Faster deployment – ERP systems are difficult to deploy. Installing , configuring and deploying client software on the users PC are expansive activities and require special technical skills. When you use a hosted ERP system, all your users have to do is point their web browser to a URL, login, and start working.
- Lower risks – Since the initial costs of starting a hosted ERP project are much less than those of locally installed software (see above) , in the case of a project failure, the financial damages are limited, and a decision to rollback or switch to a different ERP software is easier. The investment made in a hosted system are minimal – all you paid for was the monthly subscription fees. You are not stuck with hardware, software licenses an IT personal, who might become ‘useless’ if you decide to switch to another ERP solution.
ERP system hosting Disadvantages
- Security – this is probably the major concernin regards to using a SaaS ERP. Your company’s most valuable information asset: customer, prices, orders and products, are not protected behind your own firewall, but rather accessible through the Internet. As the data travels back and forth from your hosting provider to your users, there is no way for you to monitor what happnes. If your hosting provider is hacked, your data is at risk.
- Customization – hosted ERP providers run multiple instances of different companies on a single installation. That makes customization somewhat more difficult, as the code running the core ERP system is shared between instances.
- Internet connectivity dependence - when all your information and business processes are located outside of your network,reliable rInternet connectivity becomes vital. If your link is down, your business is down. There are things you could do to make things better, such as using 2 different lines from 2 different ISPs, but downtime due to lack of Internet conncetity is inevitable.