On-demand solutions require only a Web browser for access, eliminating the need to install or maintain software or hardware. The software vendor-client relationship is also fundamentally changed from a one-time transaction, often with hidden costs, to a long-term partnership based on predictable monthly fees--a subscription-based service relationship.

The question is whether SaaS is just another passing technology trend or a lasting technology solution that delivers real business value.

A new model
SaaS is less about technology than it is about a new business model that incorporates the delivery of software, content and services as flexible, Web-based solutions.

For fabricators, metalformers and other manufacturers, this means accessing ERP functionality as an integrated Web service, with the ability to manage and monitor the entire business operation, including the plant floor, from anywhere, at any time. The manufacturing enterprise gains control and reduces costs. Company investment in upgrading servers, operating systems, databases, backup equipment and complex programming environments is unnecessary--the software vendor provides them.

With true SaaS, all users run off one version of the software (with technologies that guarantee privacy and security between companies). Each company can configure the software to its unique business needs. The software is constantly updated, and changes are automatically available to everyone, much like user interface with Google or eBay. You never have to make sure you have the most recent version of Google. In addition, customers can deploy the application rapidly because they don't have the lead time and hassles associated with configuring their local environments.

SaaS offers other advantages over traditional licensed software packages. There's no need to buy and install servers, databases, operating systems and backup equipment. Users don't need to maintain and constantly upgrade servers and software. The data is protected by industry-standard security and full-time IT security professionals. There's a lower cost of ownership over time, and there's less configuration, less complexity and fewer maintenance costs with SaaS than licensed software.

Real value
The SaaS model offers real value. The approach evolved to drive out costs and complexity in the relationship between the software vendor and the customer. It addresses many problems that have arisen over the years with legacy ERP packages.

Proven SaaS ERP solutions achieve significant cost, quality and productivity improvements for companies faced with increasing customer demands, global pressures, material cost increases and other market pressures.

The next step
To get a real SaaS solution that provides lasting value, be sure you know what you're looking at. Avoid a hosted legacy ERP application that will add cost and complexity to the customer-vendor relationship. Software buyers should insist on seeing the actual software running in a browser and observe the software in action at a similar fabricating or metalforming company. Also, find out if there's a fixed price implementation option and understand how many users are needed to get the full value from the system. SaaS is a subscription-based service, with fees usually based on number of users at a company. Many vendors will use a low number to make a low initial cost. The customer finds that more people need to use it to make it effective--shipping/receiving clerks, press operators and quality inspectors. They then get surprised with a big uptick in costs. Ask the software vendor to demonstrate the entire system from one of your computers without loading any software on it beforehand.

About Mark Symonds
Symonds is president and CEO of Plexus Systems, Inc., developers of Plexus Online, on-demand software for the manufacturing enterprise. Symonds' vast IT experience includes a highly successful entrepreneurial venture and IT business consulting at Arthur Andersen & Co. (now Accenture). Symonds holds an MBA in finance and accounting from Cornell University's Johnson Graduate School of Management and a bachelor's degree in economics and French from the University of Rochester. He is a Certified Public Accountant; certified in production and inventory management (CPIM) by the American Production and Inventory Control Society; and holds a variety of industry association memberships, including the Precision Metalforming Association (PMA), Industrial Fasteners Institute (IFI), the Forging Industry Association (FIA), the Automotive Industry Action Group (AIAG) and the Original Equipment Suppliers Association (OESA).