Saas vs. Traditional ERP: Which is Right for You?

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1 Saas vs. Traditional ERP: Which is Right for You? Eric Kimberling President and Chairman Panorama Consulting Solutions Phone: ERP 1

2 Agenda 1 Brief Introduction of Panorama Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery O Options 4 Marketing Hype Behind SaaS 5 Challenges of SaaS 6 Finding the Right ERP Solution 7 Questions and Answers 2

3 About Panorama Consulting Solutions Niche consulting firm with focus on the ERP market We our service offerings include: ERP Software Evaluation and Selection ERP Implementation Project Management ERP Organizational Change Management and Benefits Realization IT Staffing and Support Application Development Experience with 150+ ERP packages Depth in targeted industries, including manufacturing, distribution, supply chain, and high-growth companies ERP Vendor Independent and Neutral 3

4 Some of Our Clients 4

5 Broad and Deep ERP Expertise Some of the 150+ different ERP software packages we have evaluated and implemented for our clients 5

6 Agenda 1 Brief Introduction of Panorama Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery O Options 4 Marketing Hype Behind SaaS 5 Challenges of SaaS 6 Finding the Right ERP Solution 7 Questions and Answers 6

7 Purpose of this Webinar Provide an independent and unbiased view of various ERP delivery options Understand the spectrum of hosted vs. onpremise ERP solutions Understand the pros and cons of SaaS vs. onpremise ERP models Provide an evaluation checklist to find the right solution for your organization 7

8 Agenda 1 Brief Introduction of Panorama O Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery Options 4 Marketing Hype Behind SaaS 5 Challenges of SaaS 6 Finding the Right ERP Solution 7 Questions and Answers 8

9 ERP Options Traditional, on-premise ERP ERP hosted on-site Company owns the ERP software Ability to configure and customize as needed Software as a Service (SaaS) Subscription-based ERP Less flexibility to customize the software Similar to leasing vs. buying a car 9

10 ERP Options (Cont d) Hybrid Solutions Single, company-specific instance of ERP software hosted on an external site Combines flexibility of on-premise ERP with the outsourced model of SaaS Ability to move instance in-house at later date, or vice versa Many traditional ERP software vendors are providing these types of solutions to respond to interest in SaaS 10

11 Viability of ERP Options Traditional, on-premise ERP Flat revenue growth in 2008/2009 Software as a Service (SaaS) Garner predicts interest in SaaS increases for companies trying to reduce capital spending IDC predicts 40% growth of SaaS in 2009 Hybrid solutions Leverages proven and heavily adopted traditional ERP model and combines with trend toward outsourcing IT 11

12 Agenda 1 Brief Introduction of Panorama Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery O Options 4 Marketing Hype Behind SaaS 5 Challenges of Saas 6 Finding the Right ERP Solution 7 Questions and Answers 12

13 Saas Marketing Hype Faster and easier deployment Guaranteed uptime Faster return on investment Lower cost of ownership Reduced IT resource needs Less disruptive to business 13

14 On the Surface, SaaS has Potential Advantages Over On-Premise Shorter Implementation Lower Upfront Costs TCO On-Premise Longer Implementation Cycle Average Duration is 19.8 months (Panorama s Report) Hardware Costs Software Costs License Fees Implementation Costs Higher TCO Hardware Maintenance Software Maintenance IT Resource Staffing SaaS Short Implementation Cycle Implementation process less than 6 months (Aberdeen) Subscription-based No Upfront License Costs Less required training Lower TCO No hardware maintenance No continuous hardware upgrade costs No software maintenance Reduced IT Staffing Guaranteed uptime 14

15 On the Surface, SaaS has Potential Advantages Over On-Premise (Cont d) ROI On-Premise Longer ROI because of higher initial costs SaaS Accelerated ROI: Low upfront costs to customer Deployment Customer managed deployment Hardware maintenance, bug fixes are handled by vendor Update Requires downtime and schedules maintenance Handled by vendor through routine scheduled maintenance 15

16 Perpetual Cycle of SaaS and On- Premise Single, Onpremise ERP Solution Crisis of Flexibility, Standardization, and Integration Crisis of Burden, Cost, Risk, and Overhead SaaS / Cloud / Best of Breed Applications 16

17 Panorama Poll Results Which ERP Software and SaaS Strategies Are Being Considered By Your Company? 18% 27% 10% 45% Maintain Current SaaS Level for Next 2 Years Replace Current ERP with SaaS Replace Current SaaS with Traditional ERP Upgrade SaaS Software within Next 2 Years Read the full blog on our website: Why SaaS and Cloud Enterprise Applications Are Ensuring A Bright Future For Big ERP Systems 17

18 Agenda 1 Brief Introduction of Panorama Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery O Options 4 Marketing Hype Behind SaaS 5 Challenges of SaaS 6 Finding the Right ERP Solution 7 Questions and Answers 18

19 Challenges of SaaS Customization Solutions provide limited ability to customize software Integration Integration into existing legacy systems can be more challenging Data Security Customer must trust the vendor s security system Operational Transparency Customer doesn t have clear visibility into the system s health 19

20 Challenges of SaaS Long-term Costs Additional fees for extra bandwidth and storage Annual SaaS subscription costs are higher than maintenance fees for most on-premise software Software licenses represent less than 25% of the total cost of ownership of a typical ERP implementation Business Complexity SaaS can be challenging when expanding to multiple departments in a large corporation Cost savings of a SaaS model may not be as evident in complex deployments 20

21 Challenges of SaaS Organizational Change Software is rarely the hard part of an implementation Changing an organization s business processes and people is the hardest part of any implementation At the end of the day, SaaS or not, ERP implementations are difficult to manage Relative inflexibility of SaaS magnifies organizational change management challenges 21

22 Agenda 1 Brief Introduction of Panorama Consulting 2 Purpose of the Webinar 3 Overview of Various ERP Delivery O Options 4 Marketing Hype Behind SaaS 5 Challenges of SaaS 6 Finding the Right ERP Solution 7 Questions and Answers 22

23 Checklist: SaaS vs. On-premise? Is there a need for a highly customized solution? Is there a need to integrate with legacy apps? How large is the planned deployment? Are there features that are missing from software? What is the timeline for deployment? What is the experience of your IT staff? Is there a need to upgrade a significant portion of your IT infrastructure? How big of a change will the software entail? 23

24 When To Choose SaaS vs. Onpremise? Business processes SaaS Simple or vanilla business processes Immature or undefined business processes On-Premise Complex or unique business processes Well-established business processes Employees Low tenure High tenure Business model Stable, little change Volatile or constantly evolving Company size Small to mid-size Mid-size to large, global IT skills Little to none Sophisticated IT infrastructure Little to none Well-established Integration with other systems Little to none Need for integration to other applications Control Little need or desire Require control 24

25 Either Way, Be Realistic SaaS can be a good option, but it s not for everyone ERP isn t about software, but it is about: People Business processes Adapting to new business processes and systems is challenging There are many ERP options; consider them all Don t be short-sighted or forget to protect yourself in the long-term 25

26 SaaS vs. Traditional ERP: Which is Right for You? Our Next Webinar: Lessons Learned from Failed ERP Implementations on Thursday, October 6, Eric Kimberling President and Chairman Panorama Consulting Solutions ERP Brian Potts Manager, Business Development Panorama Consulting Solutions ERP 26

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