What to Look for in Your Next Erp Cloud Strategies and Other Deployment Options

August 2019

WHAT TO LOOK FOR IN YOUR NEXT ERP CLOUD STRATEGIES AND OTHER DEPLOYMENT OPTIONS

Spotlight on Looking for a new Enterprise Resource Planning (ERP) solution is not Plex Systems something you do every day. According to the Mint Jutras 2019 Enterprise In this report we highlight Solution Study, the average age of ERP implementations today is one of the few ERP approximately 7.75 years. If you’ve implemented a new solution within solutions that was born in the last five years, hopefully you are not looking again quite so soon. the cloud and is offered Therefore, it is safe to say that (unless you’ve recently changed jobs), exclusively as Software as anyone looking today hasn’t done so in the past eight to ten years, or a Service (SaaS). Plex even longer. A lot has changed, and it is very possible your current Systems was also born on solution has not kept up. the shop floor of a factory making axles, pinion gears Eight to ten years ago deployment options were hardly a consideration. and drive shafts. Its Most ERP solutions were still licensed and deployed on your own founders are the workers premises, or perhaps licensed and hosted by a reputable third party. A who kept the presses short decade ago ERP could easily have been called the last bastion of running and made sure resistance to Software as a Service (SaaS). “Cloud” had yet to become part parts matched customer of the business vernacular and “SaaS” was still a relatively new and poorly specs. Frustrated with understood concept. While other complementary solutions, particularly inaccurate inventory, Customer Relationship Management (CRM), were headed in that machine breakdowns and even making the wrong direction, entrusting the transactional system of record of your business parts, they built Plex to to the cloud required a higher level of trust that had not yet developed. make the plant run better. But now - how times have changed! Today the majority of businesses have The Plex Manufacturing some sort of cloud strategy and the shift to the cloud and SaaS has begun in Cloud now connects every earnest. Thirty-one percent (31%) of survey participants in the 2019 Mint manufacturing operation in the cloud. Jutras Enterprise Solution Study have a SaaS deployment of ERP, and for those that do not, 51% say they will move in this direction, some sooner, some later. If you are currently or soon to be selecting a new ERP, it should be a critical factor in your evaluation. You might think decisions about deployment could be deferred until after you have chosen a solution. But this must be considered up front because not all ERP solution providers offer the same (if any) choices of deployment options. In this report we highlight The Plex Manufacturing Cloud (offered by Plex Systems), one of the very few ERP solutions that was born in the cloud and is offered exclusively as a multi-tenant SaaS solution.

DEFINING DEPLOYMENT OPTIONS Non-technical ERP end users often don’t know, care or need to know which of these deployment options are actually being used to deliver the application and they are even less likely to care how it is paid for. But for those What to Look for In Your Next ERP Page 2 of 13

Data Source responsible for the purchase and deployment decisions, it is of paramount In this report Mint Jutras importance to understand all the potentially confusing options. references data collected In our last few annual enterprise solution studies (including our most recent in from its 2019 Enterprise 2019), we have asked how the participant’s current solution is deployed. We Solution Study. For years offer the following options to choose from: this annual study has investigated perceptions, • Software as a Service (SaaS): Software is delivered only as a service. It is goals, challenges and not delivered on a CD or other media to be loaded on your own (or status of software used another party’s) computer to run a business, as well • Hosted and managed by your ERP vendor: Software is licensed by you, as the impact of these solutions on the but you pay your ERP vendor to manage and maintain (host) hardware enterprise. and software • Hosted by an independent 3rd party: Software is licensed by you, but This year the study you pay another party to manage and maintain (host) hardware and collected responses from software 464 participants, from companies of all sizes • Traditional licensed on-premise: You license the software and are from very small to very responsible for managing and maintaining it on your own premises large, representing a • Hybrid: Parts are licensed and maintained on-premise and parts (e.g. add- wide range of industries. on modules) are SaaS

Given our focus on cloud strategies it is important to point out that hosted solutions may reside on your premises or on servers owned and operated by a third party. But today they are quite often hosted and accessed via the cloud (more on cloud versus SaaS later). However, the customer still has to apply bug fixes, updates and upgrades, or pay a third party to do so. Each year the mix of deployments becomes more diverse. Figure 1 shows the spread this year, with SaaS being the most prevalent by a small margin. With a sample of 464, this should not be construed to mean that 31% of all ERP deployments today are SaaS. This is just a random sample and relatively small considering the millions of ERP implementations around the world. Think of it as directionally relevant. Figure 1: How is your current ERP deployed?

40% All Respondents 31% 29% 30% 23% 20% 11% 10% 6% 0% Software as a Hosted and Hosted and Traditional Hybrid: on- Service (SaaS) managed by your managed by an licensed on- premise and solution vendor independent 3rd premise cloud (SaaS or party hosted) Source: Mint Jutras 2019 Enterprise Solution Study

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Also, for this question in particular, we have to take into account the observation noted above about end users not necessarily knowing or caring how an ERP is deployed. There is definitely some residual confusion over these options. We constantly assess this potential for confusion by cross-referencing different questions in our survey. In addition to asking how a participant’s current system is deployed, we ask which solution is deployed. It is not uncommon for a participant running a solution that is offered exclusively as SaaS to select the second option (hosted and managed by your ERP vendor). We find this to be a common misperception and therefore accepted the response, but we scrubbed out additional responses where SaaS was selected even though no SaaS option of the selected product was offered by the vendor, or where on-premise was selected even though the participating company was running a solution offered exclusively as SaaS. Web-enabled user Web-enabled user interfaces further cloud the issue (pun intended). Many interfaces cloud the issue non-technical users simply don’t know whether their organizations have (pun intended). Many licensed a specific version of the product (and perhaps pay maintenance in non-technical users simply don’t know order to have access to updates) or if they subscribe to software as a service. whether their More on the different ways you can pay for ERP later, but for now, we simply organizations have include Figure 1 to show diversity of implementations today, and as an licensed a specific version indication that the acceptance of cloud and SaaS has grown. of the product (and We also asked those that were not already using a SaaS-based solution if they perhaps pay maintenance in order to had specific plans to move to SaaS (Figure 2). have access to updates) Figure 2: Do you have specific plans to move your ERP to SaaS? or if they subscribe to All Respondents software as a service. 30% 25% 23% 24% 20% 17% 11% 10%

0% Yes, within Yes, within Yes, No Undecided 1 year 2 years Eventually Source: Mint Jutras 2019 Enterprise Solution Study Over half (51%) say they will move in this direction, some sooner, some later. Another 24% are still undecided, leaving only one in four (25%) bucking the trend towards SaaS, and frankly, we suspect that some of those saying no today will likely reconsider or move to cloud at some point in the future. With almost every ERP software vendor hopping on the cloud bandwagon today, and many of the largest claiming victory in the race to be the biggest and the best, we fear many business users are also hopping on that wagon without truly understanding the benefits. And without this kind of knowledge,

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choices are being made without full understanding and some of those benefits are being left on the table. Many solutions that were once only available as traditional, licensed deployments (on your own computer or a trusted service provider’s) now offer a choice. But some of these “cloud” choices are really hosted solutions, which contributes to the confusion. Other solutions that were born in the cloud may only be offered through SaaS. It is important to understand the difference between cloud and SaaS, as well as the different “flavors” of SaaS (multi- tenant and multi-instance). CLOUD VERSUS SAAS Many use the terms “cloud” and “SaaS” interchangeably, but there are some important differences. So, let’s distinguish between the two: • Cloud refers to access to computing, software and storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or All SaaS is cloud those owned and managed by another company, but your access is computing, but not all through the Internet and therefore through the “cloud,” whether cloud computing is SaaS. private or public. • SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or a third party’s) computer. It is generally paid for on a subscription basis and does not reside on your computers at all. True SaaS is Web native, meaning accessible from any browser with no client software to install or maintain. We can conclude: All SaaS is cloud computing, but not all cloud computing is Multi-tenant versus SaaS. Single-tenant SaaS Multi-tenant SaaS: Traditional on-premise or hosted solutions might (or might not) be accessed Multiple companies use via the cloud, although this is more likely to be a private cloud. Those the same instance of delivered as a service (SaaS) might be offered as multi-tenant or single-tenant (hosted) software; (also known as multi-instance) or both. configuration settings, company and role-based MULTI-TENANT VERSUS SINGLE-TENANT SAAS access personalize SaaS purists will insist that in order to be true SaaS, the solution must also be business processes and “multi-tenant.” This means there is only one instance of the software itself. protect data security. The data belonging to each subscriber to the software as a service is segregated and secured, with configuration settings used to tailor the look and Single-tenant (or Multi- instance) SaaS: Each feel and personalize business processes. But everyone runs a common set of company is given its own code. However, SaaS can in fact be single-tenant (multi-instance), and still be instance of the (hosted) considered SaaS. After all, it is still being delivered as a service. software, but may share There is also a school of thought that believes whether the solution is common services, such delivered multi-tenant or multi-instance matters far more to the vendor than as an integration platform, and security. to the end user. It is the solution provider that benefits most directly from

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offering a multi-tenant solution because this allows them to scale delivery with less cost. Obviously delivering bug fixes and product innovation to a single instance of software, supporting many different customers, is far easier and more efficient for the vendor. However, this can (and should) translate into serious benefits for the user as well since all updates can be applied to all users at the same time.

While only 13% admitted We asked our 2019 survey respondents if they cared about multi-tenancy to not knowing the (Figure 3). While only 13% admitted to not knowing the difference between difference between multi- multi-tenant and single-tenant, we suspect that at least some of the 23% that tenant and single-tenant, said No (we don’t care) might not have a full understanding. Because if they we suspect that at least did, they would care. They would either prefer one over the other or would some of the 23% that said appreciate having a choice. No (we don’t care) might not have a full Figure 3: Do you care if your SaaS solution is multi-tenant? understanding. Because if All Respondents they did, they would care. 29% They would either prefer 30% one over the other or 23% 20% would appreciate having 20% 15% a choice. 13% 10%

0% No Yes, I prefer a I don't really Yes, I prefer Yes, I like to single-tenant understand the multi-tenant have a choice solution difference between single and multi- tenant Source: Mint Jutras 2019 Enterprise Solution Study

Solution providers that Solution providers that offer only a multi-tenant SaaS solution are typically offer only a multi-tenant able to deliver more innovation than those that offer the same solution with a SaaS solution are typically choice of deployment options (on-premise, single-tenant and/or multi-tenant able to deliver more SaaS). Those who offer their solutions exclusively as a multi-tenant SaaS innovation than those solution typically have a distinct advantage by only having to maintain a single that offer the same solution with a choice of line of code. deployment options. SPOTLIGHT ON THE PLEX MANUFACTURING CLOUD The Plex Manufacturing Cloud, for example, has been delivered exclusively via multi-tenant SaaS for nearly 20 years (since 2001). In addition, Plex uniquely offers opt-in updates, meaning customers have trial access to features, can test those features against their data (in a safe test environment), and can opt in or apply those features on their own timeline. There are no forced upgrades, and in fact no upgrades in the traditional sense at all, just opt-in innovation delivered real time.

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The Plex Manufacturing Secondly, the Plex Manufacturing Cloud supports a user community all running Cloud supports a user the same underlying code, a benefit of a multi-tenant environment. This community all running the means there are no version compatibility issues or differences among its same underlying code, a customers, and therefore customers can and do freely share best practices benefit of a multi-tenant and suggestions that apply equally to one another. environment. THE DOWNSIDE OF OFFERING CHOICE Solution providers that deliver on-premise solutions are forced to maintain multiple versions of the software. Very often the software is offered on a choice of operating systems and databases, and the vendors must support multiple release levels determined by their customers’ ability to keep pace with upgrades. For every person-day they spend on innovation, they spend another multiple of that day making sure it works across multiple environments. Those vendors that offer the same solution both as SaaS and on-premise must accommodate these choices and are also gated by their on- premise customers’ ability to accept change. Those offering a multi-tenant SaaS solution exclusively can devote their entire development budgets to innovation. Solution providers offering single-tenant solutions might not have to deal with different operating systems and data bases, but the vendor still doesn’t have the luxury of maintaining a single line of code because not every customer will be upgraded simultaneously. Indeed, some promote this as a “feature” that offers the customer more control over the timing. Some vendors choose to not deliver their SaaS solutions as multi-tenant for one of two reasons: Either their solution is not architected to support this, or because they feel they can deliver a more customized solution through multiple instances. And in fact, some companies purchasing ERP solutions prefer not to run in a multi-tenant environment, often for the same reasons. CUSTOMIZATION

Unlike most providers of While it is not impossible to deliver customized solutions through a multi- multi-tenant SaaS tenant SaaS solution, it adds a level of complexity for the solution provider solutions, in its early years that few have mastered, and most are not willing to absorb. Unlike most Plex Systems willingly providers of multi-tenant SaaS solutions, in its early years Plex Systems “customized” the willingly “customized” the software and did indeed “master” the process. The software and did indeed enhanced software wasn’t custom for long (if at all). Plex always incorporated “master” the process. The these enhancements into the product. As a multi-tenant SaaS solution, every enhanced software single customer runs the exact same software. It just might not look or behave wasn’t custom for long (if identically from customer to customer because most of these enhancements at all). Plex always incorporated these could be selectively turned on… or not. This was made possible through its enhancements into the “opt-in” approach. product. In those early days, the lion’s share of Plex’s innovation came from customer- driven (and also customer funded) enhancements. So, a customer would pay Plex Systems to enhance the product and other customers would benefit. In other user communities this does not happen, at least not consistently. The

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typical way of thinking is, “I paid for it and it’s mine and only mine.” In the land of Plex, customers simply viewed this as making a contribution to the community. And they expected others to do the same. Each gave a little, and everyone got a lot. When everyone is running the same software, literally, not figuratively, it creates a unique sense of community, one of being “all in” together. This strategy worked brilliantly for years, but then Plex reached a point in its own maturing process where it no longer made as much sense. The early gaps in functionality had been filled and Plex needed to formulate its own strategy for growth, rather than let itself be led entirely by its customers. Adding functionality that was not mainstream, or features that perhaps led down a path Plex deemed not to be strategic, would only add unwanted complexity to the solution. So, several years ago Plex took charge of the roadmap and began to phase out customer-funded development and increased its R&D investment.

With a modern, flexible And therefore, today if you intend to make invasive customizations to your architecture and a strong ERP, you are better off going with a single-tenant solution. But with a modern, platform, Mint Jutras flexible architecture and a strong platform, Mint Jutras would question would question whether whether invasive customization is necessary or advisable. It’s one thing to invasive customization is extend the software (which is possible with Plex and other multi-tenant necessary or advisable. solutions), it’s quite another to be mucking around in source code. It’s one thing to extend the software (which is If the customization truly differentiates your business, it may be worth it. If it possible with Plex and does not, if its only purpose is to perpetuate the way things have always been other multi-tenant done (sometimes for no better reason than because an employee was solutions), it’s quite unwilling to change), then don’t do it. Don’t risk building barriers to further another to be mucking innovation. It’s really as simple as that. around in source code. The more defendable reason for preferring a single-tenant environment is because you operate under federal regulations (like the FDA in the United States) that force you to be “re-certified” when your software undergoes an upgrade. But if that is not the case, why not let your SaaS solution provider upgrade your software, thereby reducing your own cost and effort? After all, the top challenge to maximizing the value of ERP solutions, as reported by our study participants, was, “The cost and disruption of upgrades prevents us from innovating.”

OTHER BENEFITS OF SAAS If you are still undecided about your preferred deployment options, we share with you the possible benefits of moving to a SaaS solution. We asked those who were considering a SaaS solution (but not yet using one) what appealed to them about SaaS. Their responses are summarized in the “Anticipated” column in Table 2. For those already on a SaaS solution, we asked what benefits they had achieved by moving to SaaS. Participants were allowed to select any and all that applied. We found the answers this year disappointing.

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Table 2: Anticipated versus Realized Benefits of SaaS

Anticipated Actual Reduced cost and effort of upgrades 37% 38% More viable business continuity plan 28% 21% Reduced cost (startup cost, TCO or both) 28% 29% More innovation/enhancements through more 27% 26% frequent updates Elimination of HW and infrastructure along with 27% 26% associated maintenance Ability to treat as OpEx versus CapEx 24% 27% Ease of remote access for distributed workforce 24% 29% More strategic use of our IT resources 23% 24% Reduced or eliminated IT staff 21% 29% Easier to scale (up or down) 21% 29% We have substantially lowered our risk 20% 18% Ease of bringing up and supporting remote sites 17% 27% Source: Mint Jutras 2019 Enterprise Solution Study

We have asked the question about anticipated benefits every year since Mint Jutras was founded in 2011. We started asking about the actual benefits realized once our sample of SaaS implementations reached a respectable percentage. Over the years the potential benefits we list have evolved but have been quite similar year after year. And year after year the percentage of participants recognizing the various potential benefits increased – until this year. Like the tide, the surge towards cloud seems to When SaaS was far less popular, participants worked hard at analyzing the be unstoppable. And as pros and cons of SaaS. Now with all the media and vendor hype, it appears to people and companies simply be a given. Like the tide, the surge towards cloud seems to be accept the inevitable, unstoppable. And as people and companies accept the inevitable, they stop they stop looking at the looking at the decision with a critical and questioning eye. decision with a critical and questioning eye. And therefore, we feel compelled to comment further on some of the benefits of a SaaS solution. The list you see in Table 2 can be summarized into the following categories: • Cost considerations • Innovation • Growth and distributed environments • Risk We found SaaS implementations COST SAVINGS typically shaved a full month off the time to Cost savings can come from eliminating the ongoing cost of hardware and reaching a first “go live” associated maintenance, along with the sheer cost of obsolescence. They can milestone.

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also come from lower startup costs. We found SaaS implementations typically shaved a full month off the time to reaching a first “go live” milestone. Traditional, skilled It is also likely that a SaaS implementation can be supported with lower IT technical resources staffing levels. The fear of staff reductions was indeed one of the reasons IT aren't required just for resisted SaaS in the past. Traditional, skilled technical resources aren't the care and feeding of required just for the care and feeding of ERP, or at least not as many. Some ERP, or at least not as Plex customers, particularly those that implemented the Plex Manufacturing many. Some Plex Cloud as their first-ever ERP solution, run with no IT staff at all. But those that customers, particularly already had IT staff on board when they converted to Plex, did not eliminate those that implemented the Plex Manufacturing those employees, but instead redeployed them more strategically. Mint Jutras Cloud as their first-ever surveys find 87% of Plex customers re-allocate, versus reduce technical ERP solution, run with no resources as a result of going to the cloud. And therefore, instead of an IT staff at all. But 87% of outright cost savings, SaaS allowed them to derive more value without adding those that already had expense. IT staff on board when they converted to Plex, Table 2 is sorted by the percentage that anticipate the various potential did not eliminate those benefits. At the very top of the list are the cost (and effort) savings associated employees, but instead with upgrades. And yet, while at the top of the list, still less than half of our redeployed them more survey participants see this as a potential benefit. But in fact, it should strategically. produce very significant savings because the SaaS solution provider does the heavy lifting. The Plex Manufacturing Cloud, for example, uniquely eliminates upgrades altogether. That translates to cost and time savings that, until now, were a necessary evil of legacy software models. And having all customers run a single version of the software has the potential for more innovation as well. MORE INNOVATION SaaS solution providers can potentially deliver more innovation through more There is only a single line frequent and robust upgrades, particularly those maintaining a single line of of code for the Plex Manufacturing Cloud code through multi-tenant solutions. But investigate this thoroughly because across its entire installed just because they can, doesn’t mean they do, which at least in part explains base of customers, why Table 2 doesn't show much of a difference between anticipated and allowing Plex to deliver a actual benefits from more innovation. There is only a single line of code for the more continuous stream Plex Manufacturing Cloud across its entire installed base of customers, of innovation. allowing Plex to deliver a more continuous stream of innovation.

GROWTH AND DISTRIBUTED ENVIRONMENTS The access any time, from anywhere nature of a cloud solution is conducive to supporting distributed users. We found 75% of all our survey respondents had more than one operating location served by ERP even though our survey sample included companies of all sizes, from very small to very large. Even small companies (those with annual revenues under $25 million) averaged 4.91 operating locations. This average escalated to over 43 in companies with revenues over $1 billion. Even if you don’t have a highly distributed environment, chances are you have remote workers or workers that are currently on the go and must access applications and data remotely, often from mobile devices.

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Or you might (just now) be expanding globally. The Internet has leveled the playing field, enabling even tiny companies to establish a global presence. We live in times of unprecedented opportunity. To capitalize on this opportunity, growing companies will need to take some chances and be willing to fail but fail (or succeed) fast in order to move on to the next opportunity. In a rapidly Companies, in particular changing, global, digital economy they will need to be able to turn on a dime. manufacturers, both Companies, in particular manufacturers, both acquire and divest plants and acquire and divest plants and business entities business entities regularly. SaaS enables companies to rapidly add new sites, regularly. SaaS enables scale existing or new sites as business dictates, and divest sites or businesses companies to rapidly rapidly. This flexibility supports business agility. No capital expenditure add new sites, scale required; no need to build out data centers, or even put hardware or a huge existing or new sites as information technology (IT) staff in new locations. business dictates, and divest sites or businesses While cyber-security is an understandable concern to all today, SaaS solution rapidly. This flexibility providers not only deliver added security, but also the peace of mind of supports business agility. business continuity in the event of a disaster, either natural or man-made. Mint Jutras has long been a proponent of good, solid SaaS solutions. We feel all the benefits listed in Table 2 are possible, but it would appear that many of these are now overlooked, undervalued and, worst of all, left unrealized – hence the need to better understand your options and their ramifications.

HOW YOU PAY FOR ERP

Don’t confuse how you One final note before we conclude. Don’t confuse how you deploy ERP with deploy ERP with how how you pay for it. With all the hype that has been circulating about the cloud you pay for it. for almost a decade, it is no wonder that there is ample confusion over, not only how it is deployed, but also how ERP is bought and paid for. Even for seasoned enterprise application buyers, terminology can be confusing. Perpetual license. Term license. Subscriptions. Concurrent users. Named users. Enterprise licenses. Do you know how all of these are different and where they have similarities? For those familiar with all of the above, feel free to skip to the summary and conclusion. For those who need a primer…. Enterprise application software is typically not bought and sold. In the past it was always licensed for use and that practice continues today for on-premise deployments and many hosted ones. It may be licensed to be used by a company, on a particular computer or by other criteria such as number of users. Today a subscription might replace a license. USER-BASED PRICING When priced by user, you need to understand whether these users are concurrent or named. If you buy 50 concurrent users, it doesn’t matter who is using the software, when the 51st user tries to log in, he or she will be turned away. This can be an effective way of keeping the number of users in check when you have workers distributed around the world in very different time

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zones. The folks in North America will be sleeping when the workers in Asia Pacific are logging in. If you buy 50 named users, you will identify each by separate login credentials. Theoretically two different people cannot share a single named user, but this isn’t always the case. The “named” user might be a group of people (like material handlers or assembly workers). But two of those people can’t be logged in at the same time, even if only 10 other named users are active. If the group also shares a single point of entry (a kiosk or terminal on the shop floor or warehouse, perhaps) this works well. If someone else is using the login (i.e. he or she is physically standing at the terminal), the next person waits in line. If the sharing is more virtual it is much harder to manage, and also you have to question the integrity of your user count. Are you trying to cheat the system with fewer users? Per-user licensing is very Per-user licensing is very common, both in the traditional on-premise and the common, both in the traditional on-premise SaaS worlds and anywhere in between. But it can be difficult to manage and and the SaaS worlds and also raise some barriers to growth. As you add more employees or you expand anywhere in between. your implementation to a new department or function within your But it can be difficult to organization, the user count goes up, and so does the cost. You may be manage and also raise tempted to skimp on users, but this can limit the value you derive from the some barriers to growth. application. Another alternative to user-based licensing is known as an enterprise license. ENTERPRISE LICENSES An enterprise license is typically negotiated for a period of time, most likely a Typically, the biggest year. These are not all that common, and each vendor will have a different advantage to an formula for determining price, so it is important to read all the fine print and enterprise license is that understand what you are buying. Typically, the biggest advantage to this type it does not restrict the of license is that it does not restrict the number of users and therefore number of users and encourages widespread use across your enterprise, which drives more value. therefore encourages widespread use across And if at the time of renewal, you see that your ERP solution has enabled your your enterprise, which growth, you don’t mind paying more when you renew. Conversely if your drives more value. business has declined, your solution provider should gracefully lower your cost. Unfortunately, this seldom happens in the on-premise and hosted world, but is common practice in SaaS subscriptions.

The Plex Manufacturing The Plex Manufacturing Cloud is effectively an enterprise subscription, offering Cloud is effectively an unlimited users including suppliers, partners and customers. This eliminates enterprise subscription, the need to "count" licenses or deal with the choppy and unpredictable costs offering unlimited users of adding users. This creates a smooth experience where companies can focus including suppliers, on their business rather than managing subscriptions and user access. partners and customers. LICENSE OR SUBSCRIPTION? Software is generally not bought and sold, but instead licensed. Licensing software gives you the right to use it either for a specific time period or in perpetuity. Today, many license agreements also stipulate that you have the

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A maintenance right to use that software only for as long as you continue to pay maintenance agreement, which is a to the software vendor that provides the product. recurring cost, typically A maintenance agreement, which is a recurring cost, typically provides both provides both technical technical support and certain innovations. Some of those innovations will be support and certain included in your maintenance fee and others (new modules or extensions) innovations. Maintenance is typically might require an additional purchase. Maintenance is typically priced as a priced as a percentage percentage of the software license and the going rate at list price today is of the software license around 22% for ERP, but that is just for the right to the updates. Companies and the going rate at list still then have to apply the upgrades or pay a managed service to have that price today is around done. Make sure you understand whether this is based on the full list price, or 22% for ERP, but that is net - whatever you paid after any discounts were applied. Also check any just for the right to the escalation clauses. Of course, if you subscribe to a SaaS solution, maintenance updates. Companies still is included in your subscription. then have to apply the upgrades or pay a Software subscriptions also allow you to use software and include similar managed service to have innovations, but only as long as you renew your “subscription.” Often people that done. equate subscription to SaaS, and some software vendors perpetuate this by claiming SaaS solutions simply because they offer a subscription option. Generally, most applications that are delivered as SaaS are paid for through a subscription, but not all subscriptions are delivered as SaaS. A subscription- based license may be offered as a way to reduce up-front costs and therefore knock down barriers of entry. There is certainly a lot to consider when signing on the dotted line for ERP, and we have only just begun to scratch the surface. If you are not 100% confident in your ability to ask the right questions and understand all the (often confusing) terms and conditions, seek assistance. There are many consultants out there that specialize in selections and negotiations. The price you pay them is well worth it in terms of reducing risk, as well as providing you with peace of mind. Many of them are also experts in helping you get up and running as well.

KEY TAKEAWAYS AND CONCLUSION A decade ago, deployment options were hardly a consideration. Most ERP solutions were still licensed and deployed on your own premises, or perhaps licensed and hosted by a reputable third party. “Cloud” had yet to become part of the business vernacular and “SaaS” was still a relatively new and poorly understood concept. If you are currently shopping for a new ERP, chances are it has been a long time since your last evaluation. A lot has changed in recent years. Or perhaps Today the majority of this is your first experience in being on the selection committee. businesses have some sort of cloud strategy Today the majority of businesses have some sort of cloud strategy and the and the shift to the cloud shift to the cloud and SaaS has begun in earnest. If you are currently or soon to and SaaS has begun in be selecting a new ERP, it should be a critical factor in your evaluation. You earnest. might think decisions about deployment could be deferred until after you have

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chosen a solution. But this must be considered up front because not all ERP solution providers offer the same (if any) choices of deployment options. But do recognize that nearly every software vendor is racing to the cloud, and this is becoming the mainstream option with legacy on-premise options being left The majority of in the dust. consumers of ERP today The majority of consumers of ERP today recognize at least some of the recognize at least some potential for cost savings SaaS brings. And many are looking forward to being of the potential for cost savings SaaS brings. And relieved of much of the burden of upgrades and maintenance. Whether you many are looking choose a solution that is multi-tenant or multi-instance, carefully evaluate the forward to being solution provider’s approach and track record in terms of delivering relieved of much of the innovation. burden of upgrades and The access any time, from anywhere nature of a cloud solution is conducive to maintenance. supporting distributed users and bringing up remote sites rapidly and easily. More and more are able to connect the dots in terms of the connectivity of the cloud as they expand globally. But many of the potential benefits remain unrecognized and under-valued.

Don’t be held back by The depth and breadth of choice between solutions and deployment options pre-conceived notions have never been greater. Look for these choices to continue to expand. But and misperceptions with more choice comes the requirement for better due diligence and good about technology that is decisions. Don’t be held back by pre-conceived notions and misperceptions rapidly advancing. about technology that is rapidly advancing. Understand what you are buying Understand what you and how you will be paying for it. Not all deployment options are available are buying and how you from all ERP solution providers and not all SaaS ERP solutions are created will be paying for it. equal; don’t treat them as a commodity. Make a careful choice that is right for your business. If you are manufacturer in search of software to run your business efficiently and effectively, consider putting The Plex Manufacturing Cloud on your list to consider.

About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 40 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 13+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.