Rather than considering SaaS the enemy of on-premise ERP, consider how you can leverage its capabilities to consolidate, optimize, and simplify your on-premise ERP systems to achieve a better, faster, more agile result. On-premise ERP is not going away tomorrow, at least if you run it well and provide the required agility to the business and SaaS can help. The key is providing the right services levels across the entire environment.
In my last blog, 2-tier ERP: A cure for the smaller markets in a global implementation, I discussed how you can use a SaaS based ERP implementation to eliminate some of complexity of the implementing simpler, smaller markets. The focus was geographic or unit based. Similar logic can be applied to functionality. Some Line-of-Business (LOB) applications and/ Human Capital Management (HCM) / Human Resources (HR) functions can also be pulled into SaaS. The result is even more acceleration of your overall program.
Most of my clients are either using or reviewing the use of SAP SuccessFactors, SAP Ariba, and SalesForce as SaaS based LOB’s. These 3 SaaS solutions show up repetitively at many SAP clients. I am well aware SAP has CRM and even a CRM RDS (Rapid Deployment Solution) on cloud, including IBM’s SmartCloud and even CRM capability in Business-ByDesign, but SalesForce is dominant in the market and needs to be considered. Clearly there all alternatives to these 3 SaaS solutions in the market. I use them as examples and your company needs be responsible and do a comprehensive review of each area to find the exact solutions that best fit your company. I’ll simply use these as common examples.
The idea is if you can remove the scope of configuring SRM with Ariba, most HR / HCM scope with SuccessFactors, and CRM scope with SalesForce, the reduction in scope in the core and plus making them parallel projects can enable the overall implementation to move far faster and introduce some heavily requested mobile capability.
In addition, by using SaaS based products you can potentially lower costs of procurement, implementation, and support. You definitely can accelerate the roll-out of these functions and bring significant mobile capability to business in these areas which might help your business case by bringing benefits earlier. These 3 areas are especially important since the touch so many individuals with mobile roles.
By design, every SaaS program I’ve seen is heavily mobile enabled. Mobile and cloud are ideally suited for each other. The more recent thought process of agility and velocity drives a simpler and more targeted design for most SaaS solutions. The SaaS thought process better fits the minimalist mobile screens than the idea of highly optimized processes found in most core on-premise ERP systems. Cloud serves mobile well since it is equidistant to all devices. Mobile devices are not clustered like terminals around headquarters based system which up until recent was the assumption for on-premise ERP.
Even if the SaaS implementation is a wash on cost, the acceleration of delivery and the enhanced mobile capabilities may push the business case over the goal line. Keep in mind that the mobile applications are native to most SaaS applications so you don’t have to build up a support staff to maintain the mobile interfaces like with many ERP add-on products. They are as native as browser support is in SAP ERP. You still will need to manage devices and may even want to build, but the native mobile capability will lessen your IT support burden.
SaaS is not a panacea. For companies who require extremely high complexity or significant optimization of processes, it may not meet their requirements. If your company is sensitive to OpEx over CapEx (utilities generally prefer CapEx for IT) then SaaS may not be a good solution. Finally, SaaS applications require integration, most likely you require some optimization (custom functions), and require good project management, organization change, communication, and training which is not significantly different with SaaS than with on-premise based implementations. Maybe a simpler program can demand less of these soft skill deliverables, but it is not the “SaaS” that changes the effort.
In your next transformation program you should consider the use of SaaS based applications to remove scope, increase velocity and agility, reduce the overall program timeline, accelerate benefits, and potentially lower total costs.
In my next blog, I’ll examine how this idea can be applied to an existing SAP landscape requiring renovation, optimization, or simplification.