Software as a Service and ERP Systems

Software as a Service

SaaS means Software as a Service has started picking up in last decade as Internet presence and usage continue to increase. Software as a Service is based on pay as you go concept. It allows enterprises to get software as a service and pay for their usage only and thus making it affordable to smaller and medium enterprises.

More and more SaaS is offered using Cloud services means the application is hosted in an internet enabled data center and can be easily scaled based on enterprise demand. The costing model for SaaS normally is usage based comprising of number of users, resources they would use like number of days, number of transactions etc. SaaS based systems can be accessed using web browser (thin client) and not PC installed fat client software hence saving any maintenance, update and client software costs for enterprises.

As per Gartner Group report of 2011, SaaS services revenue has reached $10 billion by 2010 and it’s forecasted to increase to $21 billion+ by 2015. TOP 3 ERP vendors SAP, Oracle and Microsoft have also invested and offering SaaS based ERP solutions.

SAP’s SaaS Offering – SAP Business ByDesign

SAP is one the Key ERP vendors with high market share. In second half of 2007 SAP announced launch of SaaS based offering addressing small and medium enterprises. It is called SAP Business ByDesign. In August 2010 SAP Business ByDesign 2.5 was released to the market which offered further improved scalability and flexibility of choices.

Key offerings

  1. The solution is hosted by SAP partner and managed by SAP.
  2. For use by small and medium size enterprises having less than 500 users.
  3. Even companies requiring a low as 10 SAP Business ByDesign users can subscribe and monthly subscription ranges from $89 to $149 based on type of offering selected.
  4. The Solution has built in business analytics as well as application support and services.
  5. The offerings cover wide range of business areas. The areas covered are, Marketing, Sales, Service, Sourcing, Purchasing, Product Development, Supply Chain Planning and Control, Manufacturing, Warehousing, Logistics, Project Management, Cash Flow Management, Financials, Management Accounting, Human Resources and Employee Self Service.

Modules

  • Customer Relationship Management: Includes supports processes that cover marketing, sales and service activities.
  • Financial Management:  Provides single, up-to-date view of financial condition by integrating core business processes and financials that cover Financials, Management Accounting and Cash Flow Management.
  • Project Management:  Contains an integrated project management solution.
  • Supply Chain Management: Includes Supply Chain Setup Management, Supply Chain Planning and Control, and Manufacturing Warehousing and Logistics.
  • Supplier Relationship Management:  Focuses on relationships with suppliers, procurement processes to perform self-service procurement.
  • Human Resources Management: Covers Organizational Management, Human resources, and Employee self-service.
  • Executive Management Support: Helps management with better decision making. Its customized real time data analytics allow managers to accurately track the most important aspects of business.
  • Compliance Management: Focuses on helping enterprises maintain compliance with changing laws and regulations and to meet regulatory standards.

Flavors

CRM Starter Package: Consists of tools that help sales people in the enterprise and covers market to order business processes. Covers marketing and sales business processes areas.

Financial Starter Package: Focuses on core financials functionality that includes cash flow management, financials and account management, Human Resources and Project Management.

Professional Services Starter Package: Focuses on offering most of Market to Order and Order to Cash business processes. It does not cover Idea to Market processes and modules. Areas covered are Marketing, Sales, Sourcing, Purchasing, Project Management, Cash Flow Management, Financials, Management Accounting, Human Resources and Employee Self Service.

Configured for your business: This option makes all modules and functionalities available and is configured by SAP based on business demand and needs.

All in all SAP Business ByDesign offers complete business process integration and automation solution to small and medium enterprises at lower costs of ownership and faster implementation, expansion and use.

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Enterprise Resource Planning Systems – Part II

Today’s ERP Systems

Today’s ERP Systems are vast and cover end to end business process integration and automation. Key features of them can be listed as follows,

  • End two End enterprise wide business process integration and automation
  • Ready to use industry based solutions that are made from industry practices
  • Fully configurable system with possibility to customize specific areas for business needs
  • Faster and effective decision making using self configurable and drill down reporting
  • Standard interfacing based on industry standard data interchange standards making it easier to interface and integrate existing applications with ERP Systems
  • Internet and Collaboration capabilities making it easier to collaborate with customers, colleagues, partners and vendors.
  • Software as a service solutions for small and medium enterprises to able to afford and use industry standard based ERP systems at lower costs

Top ERP vendors in today’s market

There are many ERP vendors for different industries and business sizes. Key vendors that standout and are world known are SAP, Oracle and Microsoft.

SAP

SAP is world’s largest ERP vendor with high market share and revenues. SAP was founded in 1972 by a group of ex-IBM German employees. The product has its own evolution cycle over past three decades and its now the market leader in wide range of industries. SAP has created various solutions based on industry best practices and packaged the solutions with power of full customization (meant for multi nationals/fortune 500 companies), minor customization (medium to large size companies) and out of the box (for small and medium size companies). It further continues to develop a complete suite of ERP solutions consisting of end to end business processes.

Oracle

Next to SAP, Oracle is the second largest / known vendor in ERP market. Oracle was founded with focus on relational database management software and systems. Even for SAP the backend database many of the times would be Oracle. Oracle entered in the field of ERP systems over a period of past decade and has gained momentum with acquisition of some of the 1990s well known ERP software companies like PeopleSoft who had before acquired JD Edwards. This gave Oracle a big base of customers to expand its ERP Systems and solutions. Oracles recent acquisition of Sun Java further adds a feather in Oracle’s capability to build and deliver sound ERP Systems

Microsoft

Microsoft entered the ERP Systems with a product named Dynamics and has started emerging in last decade with focus on small and medium enterprises ERP Systems and Solutions. Microsoft Dynamics has a positive point as it combines the full end to end software needs as Microsoft makes the server and client operating systems (world known as windows), the relational database management system (known as MS SQL) and the thin browser client (known as Internet explorer). On top Microsoft is well known for its collaboration tools like Microsoft office range of products, Microsoft Sharepoint and Microsoft Duet solutions which help combine ERP systems with collaboration functionality.

ERP Systems – Further Evolution

Given the importance, dependency and need for ERP Systems, the evolution of ERP systems will continue with even more speed to bring more agility in the solution provided and adaption/implementation of ERP solutions.

ERP Systems in coming years can focus on and evolve in the areas of,

  1. Enhancing the internet based system performance and user experience. By doing so discontinuation of any client software need to use ERP systems. The need also arises from the speed with which business needs ERP systems changes done and implemented. In doing so the user experience of ERP systems usage will further help to reduce the time and effort spent on training/re-training users on ERP System functionality.
  1. Cloud based offering in the area of Software as a Service could open up easy and affordable ERP solutions for small and medium enterprises. ERP vendors are already having Software as a Service solution available for businesses. These would further evolve in cloud based low costs and easy ready solutions.
  1. The transformation of PCs to laptops and laptops to tablets on hand and other hand mobile devices becoming as powerful as laptop computers in processing speed and functionality. This opens the need for at least part of the ERP Systems solutions to be available on mobile devices.

After Thought

ERP systems have came long way over several decades and in doing so they improved the functionality offered, user experience, industry best practices and focusing on standardized solutions.

The evolution will continue towards cloud based offerings for possible small and medium business enterprises making process automations available on internet at a click of a button. The evolution will also continue in the areas of making ERP systems available on tablets and mobile devices.

As the speed of business change continues to grow higher, the ERP systems would be under constant need to become highly Agile in the area of change implementation, user experience and execution.

Enterprise Resource Planning Systems – Part I

Background

Enterprise Resource Planning (ERP) Systems started in 1970s the years’ when business and markets were heavily focused on mass production of materials and industrialization was on the peak. The so called enterprise, five to six decades back was in need of automation of industrial materials and their effective plus efficient management. The prime focus remained on materials and resources management.

In this fast changing business environment and heavy dependency of businesses on automated processes running using various IT Systems; the value and need for a reliable ERP System is constantly on rise.

ERP Systems have evolved over several decades and still continuing to evolve to become more fit for today’s business needs.

Legacy Systems

Legacy systems are generally any systems that are old systems built using software and hardware platform that is more than a decade old. Systems that are built using old programming languages like ‘COBOL’ and are running on mainframes, considered legacy systems. In some organisation such systems are still in use as they are complex, costly and difficult to replace. Legacy systems are difficult to interface with and make changes.

In organisations systems that are archived or not actively used and kept for audit purposes are also referred to as Legacy systems. These systems normally were built and used 7 or more years back and consist of business transactions and information that are of use for historical referencing. Older ERP systems are also termed as legacy if they are kept running and used for historical transactions referencing.

ERP System Contents

The enterprise resource planning system is software package that brings together various business processes by automating plus integrating them and maintaining a central database with all relevant master data and transaction data. One of the Key benefits of using ERP systems is they are normally having real time availability of information which is key for businesses.

Enterprise resource planning systems cover a wide range of business processes management namely Manufacturing, Supply Chain, Financials, Human Resources, Projects and Customer Relationship.

ERP Systems structure is made up of various modules ideally focused on respective functional domain like Manufacturing, Finance, Supply Chain, Human Resources. The system needs one central database which consists of Master and Transactions data for various modules.

Decades of ERP Evolution

ERP Systems have evolved over 4 decades. If we look at the evolution in each decade major steps happened.

1970s – MRP

In 1970s all systems were standalone and separate systems. Given the ear of industrialization 1970s ERPs started with MRP systems called Material Requirements Planning System. MRP offered production planning which helped businesses in inventory management. In the same decade the standalone financial and human resource systems evolved.

1980s – MRP II

In 1980s MRP systems where further enhanced as MRPII which helped bringing inventory management and production management together. In the same decade for financials management, FMIS systems arrived.

1990s – ERP

In 1990s major evolution happened and ERP Systems emerged which offered one integrated MRP, FMIS and HR system. In the same decade Supply Chain Management systems emerged to take care of planning, scheduling and distribution of products. As this was also the decade of Internet boom customer facing systems like e-commerce, sales force automation and customer relationship management emerged.

2000s – ERP End 2 End

In last decade (2000s) ERP systems have become robust and evolved as one end to end system covering the entire business portfolio needs. ERP systems took a turn to become industry based and various standard industry best practice based industry specific solutions emerged. In the same decade ERP vendors increased focus on making ERP systems web based and making it available as viable out of the box solutions for small and medium enterprises.

Continued in Part II …