Erp as Software as a Service (Saas) for Smes

ERP as Software as a Service *(*SaaS*)* for SMEs Table of Contents Page Abstract The main barriers for implementing ERP systems in SMEs were constraints in terms of resources and information, implementation time escalations, poorly defined organisational structures, weak formalisation of procedures or processes, unclear and also confused understanding amongst the employees and management. There are various methods to overcome the barriers of implementing ERP solutions in SMEs. This include coming up with a realistic value-adding processes required to be incorporated in the proposed ERP system, providing effective education on ERP systems, making sure as a vendors, they do not just provide lip service and to involve everyone in the whole system’s lifecycle. Software-as-a-service (SaaS) is an online delivery of softwares (Dubey & Wagle 2007). The model is uncomplicated and appealing wherein companies signs up to the use the solution which is hosted by the vendors that sells and/or develops the software rather than spending large sums on an application such as ERP and Customer Relationship Management (CRM) and installing this software on individual machines (Dubey & Wagle 2007; Banham 2008). All of the major software vendors are now offering its solution on SaaS model basis – SAP, Microsoft, IBM, Oracle and Salesforce. com are all staking their claims. Introduction SME Definition â€Å"companies with less than 250 employees, total assets under 27 million Euros,_ independent privately held_ and _ _owner-managers or their families manage the company personally (Loecher 2000; Sogorb 2002)†. _ Why ERP vendors are focusing on SME’s Barriers to implementation of ERP systems in SME’s It was found that the main barriers for implementing ERP systems in SMEs were: constraints in terms of resources and inf ormation, implementation time escalations, poorly defined organisational framework, informal and also non-orderly procedures or processes, unclear and also confused understanding amongst the employees and management. Each of these factors is now discussed in turn. _Figure 1: ERP implementation issues (source: Bernroider & Leseure 2005)_ How ERP vendors can overcome these barriers SaaS Technology Some other advantages of working with SaaS models include: low introduction and subscription costs and faster initiating speed (Kaplan 2005; Torbacki 2008), elimination of license and upgrade costs (Torbacki 2008), predictability of costs (Torbacki 2008), ow TCO costs (Total Cost of Ownership) due to lack of necessity of major investments in servers, databases and maintenance (Torbacki 2008), generating a greater ROI than traditional software packages (Kaplan 2005) no requirement of installing any software on a workstation (Torbacki 2008), online access from any location with an Internet connection (Torbacki 2008), continuous opportunity to the newest software versions and business technologies (Torbacki 2008), customers no longer require the large support staff for applications (Bontis & Chung 2000; Kapl an 2005) {draw:frame} Figure 2: Types of SaaS used or considering of using (source: Kaplan 2009)_ An example of one vendor’s SaaS offering Nationwide Express Farwest Steel Corporation SaaS alternatives have become more pervasive and observed fast development, and their cost-effectiveness, operational reliability become more obvious and there are a growing number of enterprises of all sizes that are generating performance improvements and measurable cost savings as a result of adopting SaaS. For SaaS vendors, they must focus on make possible easier deployments to avoid the need for pricey consultation support. Also they should truly deliver lower total cost of ownership (TCO) and offer more robust strategies for integration that acknowledges the current volatile environments and also in the near future. Finally, the SaaS solutions offered must be simpler, more agile, more robust, and more intuitive and worthy of all the investments allocated. References Banham, R 2008, ‘Up and Away – Companies are feeling a little less trapped by spreadsheets these days’, CFO Magazine, viewed 19 October 2009, Bernroider, E. W. N & Leseure, M. J 2005, ‘Enterprise resource planning (ERP) diffusion and characteristics according to the system’s lifecycle: A comparative view of small-to-medium sized and large enterprises’, Working Papers on Information Processing and Information Management, Institute of Information Processing and Information Management, Vienna University of Economics and Business Administration. http://epub. wu. ac. at/dyn/virlib/wp/eng/mediate/epub-wu-01_84b. pdf? ID=epub-wu-01_84b Bontis, N & Chung, H 2000, ‘The evolution of software pricing: from box licenses to application service provider models’, Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 3, pp. 246-255. Christodoulou, M 2009, ‘How big is an SME? Confusion over size could complicate international rules’, Accountancy Age, pp. 7 http://www. accountancyage. com/accountancyage/analysis/2246584/big-sme-confusion-size Deep, A, Guttridge, P, Dani, S & Burns, N 2007, ‘Investigating factors affecting ERP selection in made-to-order SME sector’, Journal of Manufacturing Technology Management, Vol. 9, No. 4, pp. 430-446. Dubey, A, Wagle D 2007, ‘Delivering Software as a Service’, The McKinsey Quarterly. http://www. mckinsey. de/downloads/publikation/mck_on_bt/2007/mobt_12_Delivering_Software_as_a_Service. pdf European Commission 2009, ‘SME Definition’, viewed 17 October 2009, Gartner 2009, Gartner Sur vey Shows Many Users are underwhelmed by Their Experiences of SaaS, viewed 17 October 2009, Harindranath, G, Dyerson, R & Barnes, D 2008, ‘ICT Adoption and Use in UK SMEs: a Failure of Initiatives? , _The _Electronic Journal Information Systems Evaluation, Volume 11, Issue 2, pp. 91 – 96. IBM 2009a, Software as a Service, viewed 17 October 2009, IBM 2009b, ‘Managed server services’, viewed 17 October 2009, IBM 2009c, Software as a Service from IBM and Innovative Computing Corp. delivers speedy customer service for Nationwide Express, IBM Software as a Service, viewed 18 October 2009, Jacobson, S, Shepherd, J, D’Aquila, M & Carter, K 2007, ‘The ERP Market Sizing Report, 2006–2011’, AMR