Make no mistake about it: ERP is a major investment for any manufacturer. The new solution you choose may be Command Central for your employees for the next eight to 10 years—or longer.
Many manufacturers begin their ERP research by looking into industry-specific features and functionality. This approach isn’t wrong; you need to be sure your new system is robust enough—and flexible enough—to support the unique ways in which you do business.
But don’t overlook one of the most important considerations: deployment.
If you haven’t researched ERP solutions in, say, five years, you may be surprised at how many platforms are now available in a cloud deployment model, or moving toward that option. You may also be skeptical about whether a cloud solution can really meet your business needs—despite the fact that so many manufacturers have already embraced cloud ERP.
Let’s take a look at the question of ERP deployment from the perspective of a manufacturer.
ERP Deployment Options Explained
Before we go any further, here’s a quick summary of the deployment options available to you:
- Software as a service (SaaS). In this model, your software will be available to you exclusively as a service. You will not have to install it on your servers and your users will access it through a browser. All software and hardware is managed by the SaaS provider and upgrades are automatic.
- Hosted solution managed by your ERP vendor. You’ll purchase software licenses, but your vendor will manage and maintain the software on their own hardware—and you’ll pay for this service.
- Hosted by a third party. This model is similar to the previous one, except that a separate entity (like AWS) will provide the hardware, hosting, and maintenance.
- Licensed on-premise. This is the traditional model in which you buy software licenses, install the platform in your own data center, and perform maintenance yourself.
- Hybrid. Some elements of the deployment will be installed on premises while others will be hosted.
At this point, you may be wondering: what about cloud ERP deployments? Why aren’t they listed as an option?
Actually, they are. A cloud ERP deployment is any implementation in which end users access the software via the internet, rather than installing it on their own desktop computers or servers. In a private cloud model, the software is installed within your company’s network and select employees (plus perhaps certain designated partners or contractors) can use it. In a public cloud model, your ERP solution is hosted by the vendor or a third party, but access to your solution is still limited to your users. So, SaaS is a type of cloud computing, but not all cloud computing is also SaaS.
There’s one more important point of difference to cover here: multi-tenant versus single-tenant SaaS.
In a multi-tenant SaaS model, your company pays to access a single instance of software that many other companies are accessing. Your data will of course be segregated from that of other companies, and you’ll be able to make certain configurations—but you’re all using the same installation. A benefit is that all updates to the underlying code are made simultaneously for all companies accessing it.
In a single-tenant SaaS model, you’re paying for access to a separate instance that has been installed just for your company. While a single-tenant model may offer you more ability to customize, some companies find that they often get slower access to system upgrades than in a multi-tenant model simply because you won’t be able to adopt changes instantly and simultaneously with other customers due to those same customizations. And because each instance is individualized, each company must own its individual upgrade planning and execution.
SaaS ERP Deployments Are On the Rise
How are enterprises responding to the wide range of deployment options that are now available to them?
In its 2019 Enterprise Solution Study, Mint Jutras asked companies which deployment model they’re using. There was a nearly even split (31% versus 29%) between SaaS and vendor-hosted deployments. Traditional on-premise deployments still account for 23% of customers. Third party-hosted and hybrid deployments remain far less common.
There’s a definite trend towards SaaS and hosted deployments. In the same study, 28% of participants plan to move their ERP deployments to SaaS within the next two years, while 23% plan to do so “eventually.” Only one-fourth have no plans to do so.
What to Look For in Your Next ERP
It’s all well and good that so many companies are embracing nontraditional deployment models for their ERP systems. But which approach is best for a manufacturing company like yours?
There’s no single answer. It all depends on your unique business processes, competitive pressures, financial situation, and a host of other factors. For a detailed overview of ERP deployment options for manufacturers, please download a new report from Mint Jutras, “What to Look For in Your Next ERP.”
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