SaaS-Based ERP Leading the Way as Manufacturers Take to the Cloud


For the next decade, the principal driver of IT productivity in the manufacturing sector will be cloud computing. So says industry analyst IDC in a recent report, Business Strategy: Cloud Computing in Manufacturing. According to Bob Parker, group vice president of Research at IDC Manufacturing Insights, "a business-led cloud investment strategy will deliver the dual benefits of greater business capability and lower IT costs."

Forrester Research notes that software-as-a-service (SaaS) is the largest and most strongly growing segment of the cloud computing market. According to its recently published study of the cloud market, the total market size of SaaS in 2011 is $21.2 billion, an amount expected to burgeon to $78.4 billion by Q1 2016. “Highly integrated software applications that process the most sensitive business data, such as enterprise resource planning (ERP), are the lantern-bearers of SaaS adoption today,” says Forrester analyst Holger Kisker.

The foundation of this growth is better understanding of the profound advantages of SaaS, particularly for small and mid-sized manufacturers and distributors. Principal advantages are:

  • No installation needed
    SaaS runs from a common web browser logged onto a SaaS provider’s website. There’s no need to spend hours installing software.
  • Platform neutrality
    The user’s hardware platform isn’t linked to the software; whether a company is running Windows, Linux, or Mac, all that is needed to access the application is Internet access and a Web browser. This makes it simple to get up and going, and also provides greater flexibility for platform change in the future.
  • Automatic upgrade/version control
    Whenever a user logs into a SaaS account, there is only one version available—the latest one. Corporate IT has no need to worry about software obsolescence or version control.
  • Better accessibility
    SaaS allows users to work when and where they choose. All software-related data is stored on the provider’s servers, making access global to authorized users with an Internet connection.

The idea of simplicity has rarely been associated with ERP solutions. As SaaS-based advantages make the implementation and usage of ERP less complex, smaller manufacturers and distributors are taking advantage of the enhanced functionality it can provide. Because of SaaS, small concerns talking ERP are no longer thought of as having their “heads in the cloud,” but rather as being grounded in the new reality of cloud-based technology.


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