Enterprise Resource Planning or ERP is a suite or set of software applications which includes financial, manufacturing, human resource and other modules that together automate the back-office business administration functions of an enterprise. During 90’s when ERP came into picture it was regarded as a star offering from software companies that helped in streamlining process, inventory optimization, order and revenue tracking , reducing operation cost and much more. Once the benefit was evident companies started to implement it in their organization and reap its benefits. Since ERP showed the result it enjoyed special privileges of wide acceptance. But this was way back in mid-90s when internet was at its infancy and on-premise software ruled the market. Networking concept was taking a myriad shape and a revolution was about start. Snap back to 21st century and we see a fundamental shift in technology offerings. The concept of on-premise software has made redundant by the latest mode of software offering called as SaaS or Software-as-service.
SaaS works on subscription based revenue model, which allows you to use software as per your need. This has led to companies from different sectors like communications, media, and consumer services to come out and embrace this type of software service model. Traditionally only tangible products like house, cars, computer hardware etc were available on pay-per-use basis but with the advancement of internet technology now even we get software on pay-per-use basis. Some of the companies that are offering SaaS include salesforce, Amazon, VNU Media and Zendesk. Some of the computer hardware companies like Dell is making an honest effort to shift its focus from less lucrative low-margin hardware business into to service-based model. The reports from a leading research firm predict by 2015 nearly 35% of global 2000 companies will adopt SaaS business model. Traditional on-premise software Companies like SAP and Oracle are in shopping spree with a purchase of SuccessFactors and Taleo. This proves even the biggies have set their eyes for the future market share of SaaS business model.
With such news going around one may see the death of ERP certain. But critics have their own say according to them even today large organization uses ERP for their end-to-end business processes. They also add, present day ERP offers cost advantage allows simpler configuration procedure with improved methods and tools. It is also trusted by executives and remains a very vital part of their business ecosystems. The licensing revenue for SAP increased by 34% and for Oracle it by 20% in recent years. This may seem contradictory but the number speaks loud. Even the loyal supporters of cloud platform hint at the co-existence of on-premise software and Saas in the future. It seems the harbingers of ERPs doomsday need to change their perception regarding on-premise software.
