Making a business case for SaaS ERP – key lessons from our recent webinar with Forrester Research
I recently had the pleasure to speak to featured guest, Forrester Research’s Liz Herbert and my colleague Claus Jepsen about creating business cases for SaaS ERP solutions.
This 45 minute discussion covered topics arising from Forrester’s report Quantifying the Business Value of SaaS DOP Investments (written by Liz.) It’s a very interesting topic because investing in any ERP is one of the most important investments an organization will ever make – with implications lasting anywhere between 10 and 15 years.
As more and more organizations look to replace legacy systems, SaaS ERP can seem like an attractive prospect. But formulating a business case or calculating TCO or ROI for these systems isn’t necessarily easy. Especially because many leaders still believe SaaS solutions to be more expensive by default than on-premises alternatives.
Our discussion has been shared as a webinar. This webinar represents a vital resource for anyone in the 75% of organizations currently rewriting their digital strategies as a result of COVID and looking to improve business agility. The discussion covers a lot of ground, but my two biggest highlights come from two specific areas. The non-dollar costs and benefits that SaaS ERP make available as part of enterprise modernization, and the vital importance of a good user experience that the right SaaS solution can provide you and your people.
Non-dollar costs and benefits of SaaS ERP
It’s true that purely in terms of licencing (i.e. your monthly subscription fee vs a one-off payment as in an on-premise solution), SaaS will likely be more expensive in the long term.
However, this relatively simplistic perspective glosses over a host of costs that SaaS doesn’t carry which are endemic to on-premise solutions. These include things like costs around software and hardware upgrades, the burden on your in-house IT resource in terms of maintenance, customization, and support, the need to manage support to business users yourself, and the toll that all of these requirements take on your overall organizational productivity.
Forrester encourages organizations to take these considerations into account as they establish business cases for SaaS ERP products. But they also encourage them to fully consider the benefits of SaaS as it relates to factors like improved business agility. After all, if you save a few hundred thousand dollars on your ERP system in terms of cost, but stifle the organization’s development by doing so in a way that ultimately costs several million, you haven’t really saved anything.
Forrester advise organizations to approach ERP selection in terms of “total economic impact” rather than “total cost of ownership” to take these more difficult-to-calculate benefits and non-dollar costs more fully into account. It’s better to create a rough model for evaluating them than it is to ignore them altogether, and thus miss out on a world of potential gain.
The business value of a good user experience
Far from being a nice to have, or a secondary consideration behind features and functions, UX is a vital component of a good SaaS ERP solution. It doesn’t matter much what features a system has if your people don’t know how to find them, aren’t aware they even exist, or struggle to make use of the system at all.
Although only a few of your people are likely to be “power users” of your ERP system – using it every day – it’s likely that everyone has to make use of it a few times a year. User experience is just as important for the “light” user as it is for the “power” user – especially in a climate where remote working means that most of your people will only interact with the business via technology. It’s important to know what your light users’ experience is like an optimise your tools for their needs. SaaS solutions make this significantly easier to do.
Better UX also leads to better adoption, and increased satisfaction. It’s not uncommon to find that even though a legacy ERP has tools for specific aspects of finance or HR, the organization still manages these functions via spreadsheets or via email, because their ERP’s user experience is so off-putting. This leads to wasted time and a lack of data transparency, which itself leads to stifled innovation and reduced productivity.
Relying on legacy technology and legacy UX won’t just cause you day-to-day operational trouble and lost productivity. It may actually make it difficult for you to hire the kind of people your organization needs to survive and thrive.
In fact, some of the more forward-thinking organizations out there have already modernized their ERP because they discovered that younger talent has no interest in beginning their careers learning the ins and outs of soon-to-be-obsolete systems. As many in the workforce begin to consider retirement, you’ll have to start considering the cost to your talent management teams of not adopting more modern ERP tools.
Want to learn more?
These are just a couple of highlights of the topics covered in our 45 minute session. To hear the whole thing for yourself and learn how you can start building an airtight business case for SaaS ERP in your organization, check out the entire on-demand recording here.
