SaaS loses popularity

According to Eric Kimberlinga (Eric Kimberling), the president of Panorama Consulting Group, experts agree in opinion that the corporate software provided according to the SaaS model is cheaper and simpler on a stravneniye from a traditsionnyma ERP systems. However the greatest effect of SaaS is that this model opens a new possibility of deployment of "big" ERP systems.

Suppliers of "cloud" applications and SaaS feel very well in a current economic environment. Such developers of the solutions provided according to the SaaS model as Salesforce.com, NetSuite grow much quicker, than the industry in general. However to tell that other ERP vendors are hopeless while it is impossible.

Not accidentally for many years trends of the ERP market changed and shaken, like the pendulum, between SaaS and traditional complex ERP systems. As it is specified in the table, the reason that traditional ERP systems did not disappear 20 years ago is the recurrence and the infinite nature of these competing trends. Just as the companies were tired of the problems connected with difficult, bulky and expensive implementations of ERP systems, the companies finally lose interest and in the SaaS model in connection with its smaller flexibility, smaller control and more compound integration.

Panorama Consulting Group, 2010

Let's consider the table on top clockwise.

"Traditional ERP systems: crisis of complexity, cost and overexpenditure of stredstvo". Analysts already in detail described problems with traditional ERP systems: they are very inconvenient, too expensive and create additional expenses for the organization. Especially in a current economic environment of the company "risk to bite off more, than can swallow". Many organizations begin to look for smaller of solution SaaS and the "cloud" systems which they can implement cheaper and with smaller risks. Thus, we moved to the lower part of the table.

"SaaS system: crisis of control, standardization and integration". Finally the organizations using point solution SaaS will face crisis of flexibility, standardization and integration. The companies develop, purchase other companies, come to new territories, all this causes inconveniences during the work with the separate systems. In such conditions separate solution SaaS for automation of different business functions become less effective. There comes the second crisis. Chief information officers begin to look for ways for standardization and consolidation, unification of business processes.

Then the cycle is repeated. It is important to note that not all companies pass the same stages of a cycle at the same time – smaller companies will often remain at the stage SaaS until they grow up so that their complexity is not maintained any more by cloud solutions while the large organizations are longer delayed at a stage of "traditional" ERP systems.

Of course, there are several opportunities which could break off this vicious circle. First, if solution SaaS turn into completely integrated corporate system in scales of all enterprise, without being point solutions as now, then it will break or will interfere with approach of the next crisis. Secondly, development of instruments of integration within SaaS solutions can reduce some current advantages of flexibility of traditional ERP systems. In the third if the economic situation is the same as last several years, there will pass a little more time before the following movement on a cycle. And, at last, developing economy will provide SaaS market strengthening.

According to Eric Kimberlinga, eventually, the organizations will progress further in adoption of the ERP solutions provided according to the SaaS model. However in the near future there will also be a need and for traditsonny ERP systems for automation of the big, complex, diversified organizations.