If you’ve followed our blogs and thought leadership over the last several years, you probably know that I’m skeptical of marketing hype and academic theories from industry analysts that don’t necessarily reflect reality.  Software as a Service, or SaaS ERP, is one of those trends that I’ve been openly skeptical of.  Granted, I’ve never doubted that SaaS has its place and niche in the industry, but I have yet to  buy into the idea that traditional on-premise ERP is dead and that SaaS options will soon take over the world.

According to new data we’re about to officially publish in February, I may need to begin softening my stance.  In our extensive study of ERP implementations across the globe, we found that just 6% of organizations implementing ERP were deploying SaaS options in 2009.  However, this number nearly tripled to 17% in 2010.  In addition to the 17% that deployed SaaS solutions, another 24% implemented ERP systems that are hosted off-site or in the cloud.  In other words, nearly half of companies implementing new enterprise software are doing so in the cloud.  Clearly, the trend toward SaaS and hosted ERP solutions is continuing in the new year and the new decade.

However, I’m still not convinced that every CIO reading this article should scrap their on-premise ERP system and switch to SaaS.  If I had to choose between the SaaS and cloud trends, I would absolutely pick cloud computing as the direction the majority will head in the next five years.  Most companies are thinking long and hard about outsourcing their IT functions, but there are always going to be a large number that benefit from the flexibility and control of on-premise solutions.  Even in those cases where CIOs are looking to the cloud, the data shows that they are much more likely to deploy traditional ERP options in the cloud rather than leveraging pure SaaS solutions.

Granted, SaaS ERP still makes sense for a number of companies.  For example, small and some mid-size companies often find SaaS to be simpler and more cost effective.  In addition, vanilla and less complex organizations may find that SaaS options handle their business requirements just fine.  Finally, ERP vendors such as Plex Systems are developing manufacturing ERP software systems that are more robust and flexible than SaaS options of years past.

Clearly, SaaS and cloud adoption are still on the rise.  However, it is important to carefully consider the options that make the most sense for your organization.  Learn more about our forthcoming ERP report by registering for upcoming ERP webinar or by attending our ERP Boot Camp training session in Denver.
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