ERP Integration with SaaS Solutions: Risks, Rewards & Considerations
As more business processes go mobile, companies are looking beyond Enterprise Resource Planning (ERP) systems to Software as a Service (SaaS) applications to extend their operations outside the enterprise and enable stronger partnerships with customers and vendors. The challenge is, how can you make these systems work together to drive maximum value for your business?
ERP Integration: Why it Matters
An ERP integration with SaaS solutions helps companies avoid the risks inherent with running multiple systems: higher overall IT costs and the loss of important business opportunities when the systems can’t “talk” to each other.
SaaS systems play an important role in your overall IT strategy. ERP systems simply can’t do everything. Most are built to handle the majority requirements of a specific user base, and are great at handling back end processes––accounts receivable, accounts payable, invoicing, etc. They are weaker, however, at handling more specific customer or vendor requirements.
Historically, this has left companies with few choices: customize their ERP to handle specific needs, license a third-party application, or change their processes to fit the ERP system.
SaaS: Multiple Advantages, Minimal Risk
ERP integration with SaaS offers another alternative. SaaS applications are one of the best ways to support specialized business processes, without the large expense associated with an on-premises third-party software implementation.
SaaS applications offer multiple advantages, including:
SaaS applications”live” in the cloud instead of on in-house servers, and are accessed via the Web, so implementation and maintenance costs are significantly lowered.
Licensing, maintenance, upgrades and security patches are all included in the monthly fee, rather than having to pay an up-front lump sum for each of those services. Staffing requirements are also reduced as companies need not maintain staff with the expertise to keep the applications running.
On-premise solutions carry multiple risks: multiple fees and vendors, regular upgrades down the road, and higher maintenance costs over time. System availability and ongoing security of important customer and company data are also major concerns.
SaaS applications are maintained and updated by the provider: most offer near 100% uptime rates, and security patches and upgrades are applied as soon as they become available, eliminating these risks.
For most companies that are experiencing rapid growth, it can be a challenge to find an in-house application that meets both their current need for a low-cost solution, and future need to handle higher business volumes. A SaaS solution grows with you, keeping costs low now, while being able to keep pace with your business needs as you grow.
Improved Customer & User Experience
Due to budget limitations, the choice for small and medium businesses has often been between paper processes and a SaaS system. Paper processes are seemingly inexpensive, but they have many disadvantages.
For example, in the case of order management, the paper alternative might involve a customer filling out a paper form and giving it to a sales rep, who then hands it off to a customer service rep to enter it into the ERP system back in the office.
This process is fraught with risk: orders may be lost or entered incorrectly, resulting in significant cost and unhappy customers when the order they receive doesn’t arrive, or doesn’t match what was discussed with the sales rep. An off-the-shelf SaaS solution can simplify this process, allowing companies to ditch the paper and improve service to their customers, while still keeping IT costs low and making business processes more predictable and manageable.
SaaS Supports Best Practices
SaaS applications can be customized if necessary, but the “out-of-the-box” solution typically supports most business needs, offering companies an opportunity to revisit their processes and bring them in line with best practices, thereby lowering business and application maintenance costs.
The best part? Most SaaS / ERP integrations can be handled relatively easily, using API’s (application programming interfaces) that allow systems to communicate with each other.
SaaS & ERP Integration: The Best of Both Worlds
Information silos are one of the most significant risks with having multiple enterprise software systems: e.g. when the customer data available within the ERP is also maintained separately in a SaaS application. ERP integration with SaaS provides better visibility into your entire business, and drives the most value out of both systems while reducing overall data maintenance costs.
According to industry analyst Gartner, there are several approaches to SaaS / ERP integrations: using the SaaS vendor’s own API, third-party integration tools, Infrastructure as a Service (IaaS) solutions that will handle integrations for you, or hiring a consultant to make the pieces fit together. Of these, the API option is the least costly and easiest option.
Other issues to consider when developing the business case for ERP integrations include:
Do you have an on-premise or cloud-based ERP? What version are you running? This will impact your ERP integration path with SaaS. Integrating recent or cloud-based versions is relatively easy: API’s can likely to handle this with minimal extra development.
If you self-host an out-of-date ERP or legacy system, the integration path might be more complex, requiring an upgrade to make the system compatible with your SaaS system’s APIs, and may even require additional modifications. It’s critical to find a SaaS vendor who has experience integrating their software with the ERP you’re using or the robust support and technical experience needed to work with your IT team.
Current business processes
Integrations are a good time to look at whether your processes are in need of an upgrade along with your software. While businesses may be unique, most companies find that bringing their processes into alignment with the best practices supported by their ERP and SaaS applications allows them to lower current maintenance and future upgrade costs, while still providing the best possible service to customers.
Maintenance and support
Maintenance and support are included in the monthly fee for most SaaS providers. Over the long-term, having the expertise of a SaaS provider to rely on, rather than having to maintain this expertise in house, can provide significant cost savings. Really consider what your current processes are costing in terms of maintenance and support when developing the business case.
Have specific questions about ERP integrations with SaaS? Let us know in the comments.