According to the research firm Gartner, an increasing number of companies, especially small and medium businesses (SMBs), are now looking at adopting enterprise resource planning (ERP) solutions on the software as a services (SaaS) model for faster deployment and enhanced cost effectiveness.
The research firm expects SaaS ERP deployment in India to grow at a compound annual growth rate (CAGR) of 28 per cent over the next five years. Organisations are increasingly adopting ERP as an integrated suite of solutions which help a company plan and manage its core business processes like production, inventory management, human resources and accounting.
Gartner estimates that there are over 1,000 organisations that have adopted SaaS-based ERP in India and China. However, SaaS ERP applications in these countries constitute less than five per cent of the overall ERP market in both.
At present, SaaS ERP adoption is being witnessed in the SMB segment. However, going forward, large enterprises, including multinationals are considering adopting SaaS for their dealer/distributor networks. Gartner states that both in India and China, SaaS-based ERP has not yet been widely adopted for important operations and verticals which are heavily regulated like banking, telecom and public sector, or in specific manufacturing operations which cannot be shared with a third-party organisation.
Further, the challenges in the adoption of SaaS ERP include limited flexibility of data and network security. Going forward, the increasing availability of different solutions, vendors and an evolving ecosystem will lead to higher adoption of SaaS ERP in India.
