Common market trends emerge as more ERP vendors bet on SaaS

In the Business Apps Casino, change is afoot. For a long time, one table - software-as-a-service ERP - attracted a limited number of players and fans. However, over the past 12 months, an increasing number of ERP vendors have lined up to place...

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In the Business Apps Casino, change is afoot. For a long time, one table - software-as-a-service ERP - attracted a limited number of players and fans. However, over the past 12 months, an increasing number of ERP vendors have lined up to place sizeable SaaS bets, while more potential customers are paying close attention to the gambles those vendors are making.

In Forrester ERP inquiries, it’s now the norm for clients to ask us about SaaS ERP. In fact, it’s unusual to field a call where SaaS isn’t mentioned. Firms may be actively considering a future change in deployment model or simply wanting to kick the tires on SaaS ERP adoption, pros and cons, and comparisons with on-premises ERP. They also seek more information about SaaS ERP market players and likely future entrants. In general, what’s changed since a year ago is that companies want to include SaaS ERP options in their assessments.

Each ERP vendor’s SaaS bet differs somewhat from those of its peers, determined both by the type of customers it’s aiming at and architectural concerns. However, there are some shared themes:

  • Repurposing existing apps. Some ERP vendors began their SaaS endeavors with apps targeted at small and midsize businesses. They’re now working to deepen the functionality of those apps to appeal to a broader, more enterprise audience. There are two key approaches: 1) expand the scope of an existing SMB product and aim it up market; or 2) carve off functionality from a SaaS midmarket apps suite (while retaining that suite) and create a new enterprise app.
  • Determining infrastructure options. When going SaaS, ERP vendors are choosing whether or not they want to play in markets other than apps, such as platform-as-a-service (by packaging up their in-house development platform) or integration-as-a-service (by building or acquiring an integration business). Alternatively, vendors may opt to rely on third-party PaaS and integration. If a vendor fields several ERP products, all of which they want to make available as SaaS, they may decide on a variety of PaaS partnerships.
  • Establishing an apps showcase. Once they have a SaaS app, ERP vendors are looking for ways to create an ecosystem around that product. They’re experimenting with app stores as a way of demonstrating extensibility for their SaaS ERP with free or paid complementary add-ons and apps provided by the vendor itself, its partners, and its customers.
  • Buying in SaaS products and expertise. Some ERP vendors have acquired SaaS apps in areas where they either lacked a SaaS offering or where they previously didn’t have a strong presence with their own product. With such purchases, the ERP vendor also gains staff with existing knowledge and experience of SaaS sales, marketing, and support, which are essential to help drive customer adoption of SaaS ERP.

What do you think? Are these some of the common trends you're seeing emerging in the SaaS ERP arena? Looking forward to hearing from you.

Posted by China Martens

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