ERP Software-as-a-service is a highly researched theory that is getting extensive acceptance in the software industry, in the last few years. Basically, Software-as-a-Service or Saas refers to a software program, where software application is installed on the provider's server instead of the user's computer.
Traditionally, the buyers of application software had to buy license of the enterprise resource planning applications from the provider company to run it on their computers and heavy investments were made by the buyers on hardware and other equipments.
There are many problems faced by companies using traditional software application service, where the application is installed on user's computer. Some of the common problems of using traditional ERP software applications are:
1. The buyer has to spend heavily on buying license, every time it uses the traditional enterprise resource planning application on a new machine, even if, the buyer has paid earlier for getting the software.
2. The policies of software companies and buyers change frequently and sometimes, the changed policies cannot be integrated to a predesigned and pre-implemented enterprise resource planning system. Hence, new investments get mandatory.
3. You need to hire qualified professionals to run enterprise software applications in your office computer and the company buying the software has to spend on hiring support staff.
4. Company buying enterprise software application has to make expenses on buying ever-changing hardware configurations and servers.
If you buy ERP Software-as-a-Service (SaaS) you are benefitted in many ways. Five main benefits of ERP Software-as-a-Service (SaaS) are:
1. ERP Software-as-a-Service is a low cost software implementation.
2. ERP Software-as-a-Service is easy to use and implement.
3. Company buying ERP Software-as-a-Service can reduce expenses on buying new hardware.
4. No need to buy license of every new software application.
5. You pay predefined fee to the provider company, which mainly depends on the quality and quantity of services used by the buyer.
If a company wishes to use Software-as-a-Service, it will have to buy the subscription of an ERP Software-as-a-Service (SaaS). To buy the subscription the company will have to pay to use to the application software installed on the providers company. The cost of ERP Software-as-a-Service (SaaS) depends on the number of calls made on the server, quality of service and speed of the service provided by the company. Service provider is responsible to give customized service depending on the requirements of the customer.
For example: If the buyer makes frequent calls to the server, the provider company will have to make changes in its infrastructure and the company using the service will not have to make expenses on buying new hardware or software.
There are two main key areas where the ERP Software-as-a-Service providing company makes agreement.
Service Level Agreement
In Service level agreement the provider company makes an agreement to provide information about the service provided such as the need of the hardware, the time period required for implementation etc.
Service Implementation Agreement
In service implementation agreement the provider company agrees to provide customization as per the requirement of the client and other features such as optimization and system integration.
