Definition of Hosted ERP
The solution refers to one where the application — enterprise resource planning (ERP), in this case — and the hardware that it runs on are provided to you as a turnkey solution by a third-party application service provider. These solutions are helpful for small business owners who don’t have the time or the in-house expertise to set up the software or infrastructure themselves.
Why Hosted enterprise resource planning softwares?
Hosted solution solves an outsourcing pain point. The higher the complexity of the outsourced hardware product, the greater the need for ERP integration — and this has been where manufacturing outsourcers have had the most trouble. Computer peripherals manufacturers are especially in need of this type of coordination with outsourced production centers. To this point there has been only sporadic and incomplete order management data between manufacturers and their outsourcing partners.
Distributed order fulfillment follows high growth companies geographically. The fastest growing manufacturing companies don’t think twice about installing another order fulfillment location at a manufacturing site once it’s running. There’s no re-locating of inventory to a central location; it is drop-shipped from center.
Usability and depth of application matters more than method of delivery. The last three years have turned the concept of using hosted applications completely around. Today usability matters more than a wealth of features no one ever really uses anyway.
drop in maintenance cost increases has helped. For many manufacturers’ IT directors, the escalating prices of maintenance costs from ERP vendors is a source of pain. A hosted solution makes this more controllable, and given that the subscription model is based on a per user basis, companies looking for a way out of contracts that have escalating maintenance costs will consider a hosted ERP solution.
Integration on a hosted platform is no longer rocket science. There are many smaller, best-of-breed vendors who offer their CRM, PRM, order management and pricing applications on both a licensed and hosted basis. Integration on a hosted platform is becoming more and more of a non-issue every day.
About Existing solutions
The few existing hosted enterprise resource planning (ERP) applications have narrowly defined footprints and target markets. The existing systems generally cater to slightly different customer markets.
There is no established leader in the Software-as-a-Service (SaaS) ERP market. The hosted enterprise resource planning (ERP) market is without enough representation and completely wide open. It is anybody’s guess who will eventually take a lead role.
The bottom line is that using a hosted ERP system will make sense for manufacturers in high-tech, complex manufacturing who today are outsourcing portions of their manufacturing or have wide distribution geographically of their manufacturing operations. Manufacturers with these characteristics will be the early adopters and will see hosted ERP as a solution to many problems rather than an experiment in cost reduction, as many other enterprise vendors view it today.