November 4, 2010 – New research on enterprise resource planning shows that software as a service ERP is finally taking off, according to “SaaS ERP: Trends and Observations 2010” from Aberdeen Group.

Aberdeen has watched trends in ERP deployments since 2007, when they characterized ERP as the last bastion of resistance to SaaS. In 2008 and 2009, they found SaaS ERP had not kept pace with other SaaS enterprise applications. Finally in mid-2010 there was an increase from 23 to 39 percent (an overall 61 percent jump) in willingness to consider SaaS ERP.

The spike can be attributed to lessened fears regarding security and loss of control. As the business world becomes more virtual and technology matures, barriers to SaaS ERP adoption are being overcome by its benefits, including lower TCO and the alternative to investing in in-house IT resources.

With a SaaS solution, there is no need to invest in large IT staffs because the solution is managed by the selected vendor. “Fifty-percent of those that are willing to consider SaaS cite the fact that they have limited IT resources and no interest in building IT staff as a top factor in the reason they are considering SaaS,” says Nick Castellina, research associate, Enterprise Applications, Aberdeen Group.

SaaS is viable for companies that want to get up and running quickly, small companies outgrowing spreadsheets, or mature companies with outdated legacy apps and skill sets. Aberdeen expects that cloud computing will become just as pervasive as traditional solutions.

Still, 50 percent of those who will not consider SaaS ERP cite security concerns. Companies that have security worries should consider that a SaaS vendor’s livelihood depends on their security expertise. Aberdeen advises exploring all options and reminds managers to exercise caution and perform due diligence.

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