ERP Implementation Approaches For SAAS Companies
It should be no surprise that many businesses can benefit significantly from ERP software. Whether manufacturers or retailers, companies realize several benefits from leveraging ERP to streamline their operations. When it comes to software companies, specifically SaaS businesses, several challenges arise with those benefits when considering ERP implementation approaches.
SaaS Accounting challenges and the need for ERP
While various financial software solutions benefit businesses across industries and company types, there are specific challenges SaaS companies face when they look to implement accounting solutions.
- For smaller SaaS companies, accounting software may be helpful, but the lack of integration with other solutions may prevent them from being useful in the long term.
- SaaS companies must also consider how subscriptions are handled within their organization and whether their accounting system can adequately handle realized revenue with the subscription’s tax implications.
SaaS companies may use spreadsheets and other manual methods that invite inefficiencies and errors with inadequate accounting software. This practice could have a ripple effect throughout the organization where forecasts and tax estimates are inaccurate.
Approaches to ERP Implementation
Companies set up as SaaS businesses can benefit from incorporating ERP to handle their operations, including all financial management components such as accounting applications. An ERP solution offers the ability to integrate various software and the addition of modules that, when working together, provide a comprehensive solution. In addition to accounting capability, robust ERP software offer SaaS companies solutions around subscription handling, human resources, customer relationship management (CRM), analytics, and reporting.
In addition, SaaS ERP implementation offers companies:
- Remote and mobile access
- Workflow optimization
- Improved customer support
- Automation of time-consuming manual processes
Overall, there are several approaches SaaS companies can take when considering an ERP solution.
The big bang approach
The big bang approach consists of going all-in on an ERP solution where software is deployed for the entire organization in one push. Everything available through the software is enabled at go-live. As one might imagine, the big bang approach requires much planning and many resources. In addition, added pressure is placed on the implementation team to ensure all goes well in time for the start date.
The phased approach
The phased approach might be better for SaaS companies that don’t require end-to-end ERP functionality all at once. With this method, implementation is planned sequentially, with select business processes rolled out one at a time. This approach requires more time but offers greater flexibility and generates fewer errors due to focusing on one business process at a time.
The parallel approach
SaaS companies can also use a parallel approach to ERP implementation. This scenario uses legacy software concurrently with the new ERP solution. Legacy software is phased out over time while the new ERP solution is phased in. This approach potentially reduces errors and eases potential pain for staff when transitioning to new processes.
Choosing an ERP Solution
When considering an ERP solution, SaaS companies will eventually begin the process of vendor review and selection. The selection process should include the following steps:
- Identify problems to be solved. SaaS companies must identify issues to be addressed before moving toward an ERP solution. Identifying challenges ensures that the chosen ERP solution is best suited to solve the specific problems identified.
- Develop objectives to be achieved. Specific objectives should be identified when considering an ERP system. This allows the company to ensure that the solution selected aligns with the goals identified and that ROI can be effectively measured.
- Establish the timeline. Companies must allow enough time to implement, test, and properly launch when choosing an ERP solution. Not every ERP solution requires the same timeframe, as different modules, the number of users, and specific operational requirements will dictate the time requirements for each company. Choosing a vendor whose suggested timeframe works well with your company’s needs is critical for the comprehensive selection process.
- Conduct the final review and selection. Companies should identify several ERP candidates and narrow their choice based on who meets the most critical requirements established before the review.
To avoid buyer’s remorse, ensure proper fit, and achieve the desired ROI, companies must adhere to specific steps, including those mentioned above.
Implementing an ERP Solution
The implementation process involved when installing an ERP solution is a complex one. Specifically for SaaS companies, it’s necessary to assess your company’s technical expertise to assist the ERP solution provider when warranted.
There is no manufacturing component for a SaaS company and likely no raw materials or inventory to consider. What is involved is intellectual property, subscriptions, server requirements, software delivery and access, and costs per user.
Finally, the company must determine which modules will be implemented, such as accounting, customer relationship management, human resources, analytics, marketing automation, and more. These modules are more relevant to a SaaS company rather than manufacturing, materials handling, warehousing, and shop floor scheduling. Finally, each module must be installed correctly, tested, and made live with few or no errors.
What are the Primary Benefits of an ERP System?
There are tremendous benefits an ERP solution can provide a SaaS company. These benefits include, but are not limited to:
- Streamlining the flow of information. With improved data gathering and analysis, companies can more easily share information for enhanced insight and better decision-making around customer access, platform usage statistics, and customer support data.
- Increased productivity. ERP solutions allow SaaS companies to get more done with less. With more data, greater insight, and more opportunities to shorten the sales cycle, an ERP solution positions SaaS companies to compete more effectively.
- Lowering operational costs. By reducing redundancy, the number of steps to handle critical processes, and manual methods, SaaS companies can significantly reduce costs associated with bringing their services to market and acquiring new customers.
- Increased collaboration. ERP systems help reduce departmental siloes and, as a result, foster greater collaboration. Better cooperation allows companies to develop new ideas and more effective products to serve their customer base better.
- Better decision-making. A key benefit for SaaS companies when implementing an ERP system is the ability to make better decisions. With increased data gathering and analysis, more opportunities to understand a changing market, and a greater understanding of clients, SaaS companies can make better decisions faster.
Solutions, such as Sage Intacct ERP, offer cloud-based ERP software that automates accounting processes and provides other core financials. With Sage Intacct, companies can add additional modules and integrate other applications more efficiently. By delivering agility, cost-efficiency, and customization, Sage Intacct provides a comprehensive ERP solution SaaS companies can leverage for more effective management and improved operational efficiency.
Driving Success with FRC
Implementing the right ERP system is essential to the growth and success of your SaaS organization. At FRC, we specialize in helping your team select and implement an ERP system that meets your unique business needs. Contact us today to speak with one of our ERP specialists.