SaaS: It’s All About the Balance Sheet

It’s hard to talk about ERP software without at least mentioning Software as a Service (SaaS) software solutions. While speaking at a conference last week, I engaged in a conversation with a software vendor who had some interesting perspectives about the benefits of SaaS.

As we’ve outlined in recent blog posts, we don’t subscribe to the concept that SaaS is always cheaper or better than traditional, on-premise ERP solutions. In some cases it can be, especially for SMBs, but in many cases it is not the best solution.

However, this vendor had some interesting insights that may be of interest to CFOs and CIOs. He mentioned that many of their customers do not buy their SaaS solutions because it is cheaper, because it is often more expensive in the long run (which I concur with). Instead, many CFOs gravitate to these solutions because it minimizes capital expenditures. In times of economic uncertainty and constrained IT budgets, getting dollars off the balance sheet and optimizing a company’s return on assets can be especially appealing.

In either case, balance sheet considerations are one of many variables that need to be considered when choosing between SaaS and on-premise ERP. The outcome of the decision will vary depending on your company size, budget, complexity of requirements, etc., but this is one variable that should be considered as part of your ERP software selection process.