In a market where labels define software vendors, the power of the enterprise resource planning (ERP) acronym has permeated the small to medium business (SMB) market. Tier one and best-of-breed vendors are embracing the ERP label as the message of choice to its clients, especially in the services sector where ERP is less mature. As organizations seek enterprise solutions to meet their business requirements, they are faced with the challenge of deciphering which solutions best suit their needs.
Everywhere one turns, a services component is incorporated into the latest and greatest offering pitched by ERP vendors. For many vendors targeting the enterprise market, service-oriented architecture (SOA) is the technology of choice; for those targeting the SMB market, software as a service (SaaS) is the technology of choice. These new approaches to selling ERP solutions are claimed to be more efficient, affordable, and simpler ways to reduce costs and address integration issues common in company-wide ERP implementations. By leveraging the Internet, the services model offered by SOA and SaaS has made ERP more attractive to all market segments.
In the past, smaller organizations would not consider ERP initiatives due to ERPs exorbitant costs. ERP implementations were associated with multimillion dollar engagements that demanded the support of a team of consultants that was hired to overhaul an organization's entire information technology (IT) infrastructure and operational systems. The entire process would be spread out over many months, and in some cases, years. With the recent trend of software vendors offering SaaS business models, ERP implementations have become a viable solution for even the smallest of organizations. SaaS has empowered small businesses to reap the benefits of full-blown ERP systems without the costs of maintaining a comprehensive IT infrastructure or the initial investment of purchasing software licenses. Consequently, ERP initiatives have recently piqued the interest of SMB organizations in a number of service sectors.
Defining SOA and SaaS
At a high level, SOA is a technological platform that organizations employ to standardize the interaction and collaboration of disparate applications. Although this can be achieved through various means, web services have become popular methods employed by ERP for services vendors when implementing an SOA framework. Numerous organizations implement SOA in which web applications interact with each other with standard protocols that can include extensible markup language (XML) running over hypertext transfer protocol (HTTP), universal description, discovery, and integration (UDDI), and simple object access protocol (SOAP). The benefits of SOA include a cost-efficient way of responding to changes in an organization by reusing services to modify business processes as needed without re-architecting entire systems. In addition, the incremental modular deployment and platform independence of an SOA framework is another advantage that is commonly promoted by vendors.
From a cost and benefit point of view, the SaaS business model delivers similar advantages to the SMB marketplace. By leasing software from vendors as needed via the Internet, organizations can implement a full-blown ERP system in a cost-effective manner. Similar to an SOA philosophy, SaaS enables SMB organizations to quickly implement or modify applications by using the Internet as a single source (platform) to run their businesses. The main difference lies in the management of an organization's infrastructure and applications. For vendors offering ERP for services, SOA is typically designed for organizations to manage their ERP systems internally. SaaS, on the other hand, is fully managed remotely by the vendor delivering the ERP system to SMB organizations, many of which do not have the expertise, infrastructure, or financial means to manage these systems themselves.
Everywhere one turns, a services component is incorporated into the latest and greatest offering pitched by ERP vendors. For many vendors targeting the enterprise market, service-oriented architecture (SOA) is the technology of choice; for those targeting the SMB market, software as a service (SaaS) is the technology of choice. These new approaches to selling ERP solutions are claimed to be more efficient, affordable, and simpler ways to reduce costs and address integration issues common in company-wide ERP implementations. By leveraging the Internet, the services model offered by SOA and SaaS has made ERP more attractive to all market segments.
In the past, smaller organizations would not consider ERP initiatives due to ERPs exorbitant costs. ERP implementations were associated with multimillion dollar engagements that demanded the support of a team of consultants that was hired to overhaul an organization's entire information technology (IT) infrastructure and operational systems. The entire process would be spread out over many months, and in some cases, years. With the recent trend of software vendors offering SaaS business models, ERP implementations have become a viable solution for even the smallest of organizations. SaaS has empowered small businesses to reap the benefits of full-blown ERP systems without the costs of maintaining a comprehensive IT infrastructure or the initial investment of purchasing software licenses. Consequently, ERP initiatives have recently piqued the interest of SMB organizations in a number of service sectors.
Defining SOA and SaaS
At a high level, SOA is a technological platform that organizations employ to standardize the interaction and collaboration of disparate applications. Although this can be achieved through various means, web services have become popular methods employed by ERP for services vendors when implementing an SOA framework. Numerous organizations implement SOA in which web applications interact with each other with standard protocols that can include extensible markup language (XML) running over hypertext transfer protocol (HTTP), universal description, discovery, and integration (UDDI), and simple object access protocol (SOAP). The benefits of SOA include a cost-efficient way of responding to changes in an organization by reusing services to modify business processes as needed without re-architecting entire systems. In addition, the incremental modular deployment and platform independence of an SOA framework is another advantage that is commonly promoted by vendors.
From a cost and benefit point of view, the SaaS business model delivers similar advantages to the SMB marketplace. By leasing software from vendors as needed via the Internet, organizations can implement a full-blown ERP system in a cost-effective manner. Similar to an SOA philosophy, SaaS enables SMB organizations to quickly implement or modify applications by using the Internet as a single source (platform) to run their businesses. The main difference lies in the management of an organization's infrastructure and applications. For vendors offering ERP for services, SOA is typically designed for organizations to manage their ERP systems internally. SaaS, on the other hand, is fully managed remotely by the vendor delivering the ERP system to SMB organizations, many of which do not have the expertise, infrastructure, or financial means to manage these systems themselves.
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