Software as a Service and Enterprise Resource Planning - Assignment Example

Software as a Service and ERP Name Institution Course Date Software as a Service and ERP QA1. Systems integration (SI) has become a growing trend in the engineering and IT environments. The trend has been prompted by the increased recognition of the value of systems integration. SI refers to engineering or IT process that involves bringing together various subsystems to form a single large system (Myerson 2001, p. 2). Systems integration has many benefits to an organization. First, SI is beneficial to an organization since it ensures the growth of revenue and increased information visibility. It also ensures the standardization of processes, which is beneficial to an organization. Additionally, SI is beneficial as it helps in balancing the competitive environment against rivals. However, SI also has its drawbacks that must be taken into account when considering integrating systems (Themistocleous et al. 2002, p. 5). The cons include high initial cost incurred in designing and implementing the system. Its implementation might disrupt the operations of a company. Enterprise Resource Planning (ERP) is one of the tools that are used by firms to achieve logical and physical integrations. ERP is software that is used to integrate functions and information into a single platform. ERP is used widely in integrating different business departments or units across a firm to ensure that they work closely with each other (Ronald 2010, p. 14). The role of ERP is particularly recognized with regards to the way it helps ion achieving logical and physical integration. Physical integration refers to the process of integrating data system across the entire firm so as to ensure that there is a seamless flow of information and decision making (Themistocleous et al. 2001, p. 195). In other words, physical integration involves creating system architecture to augment the various applications that make up a system and ensures that they work properly. ERP, therefore, plays a role in physical integration by compelling firms to concentrate on upgrading and eliminating legacy systems. At the same time, ERP ensures the achievement of physical integration by compelling firms to enhance fluidity and flexibility in the entire system (Themistocleous et al. 2002, p. 12). Like in physical integration, ERP plays an important role in ensuring the achievement of logical integration. Logical or human integration is an integration which emphasizes on integration of business processes and changes among people so as to ensure successful implementation of the system by promoting information sharing across the organization easily. ERP, therefore, ensures the achievement of logical integration by compelling firms to concentrate their energies on business practices and processes rather that functions alone (Themistocleous et al. 2001, p. 198). At the same time, ERP ensures that departments influence each other, which ensures the elimination of the Silo concept from a company. QB1. A Software as a Service (SaaS) refers to a software delivery model in which a software provider hosts all the applications and makes it available to a customer upon request over the internet at a fee. Xin and Levina (2008, p. 3) state that, with SaaS, a company does not need to install or maintain its own software; instead, SaaS allows individuals and businesses to access the software that is centrally hosted by the provider through the Internet, though at a small fee. This implies that SaaS applications are hosted and run on the provider’s servers with the provider responsible for managing the way the software is accessed including its availability, security and performance. In this case study, Seethamraju (2014, p. 11) notes that SaaS model is increasingly becoming a trend for delivering business applications for small businesses. The increased trend towards the adoption of SaaS is linked to the perceived benefits that are achieved by using SaaS model in for the delivery of business applications. Indeed, the study conducted by Seethamraju (2014, p. 12) shows that adopting SaaS as a business application model has a lot of significance to a firm. The first significance of adoption of SaaS is that it provides a firm with a cost effective way of delivering a business application. SaaS cost effective to a firm because no initial setup cost is involved. With SaaS model, a firm gets an application ready for use once they subscribe to the application. Seethamraju (2014, p. 3) also notes that SaaS is a cost effective way of acquiring an application as it minimizes the cost of software licensing. Acquiring a software license is usually very costly for firms. Fortunately, Seethamraju (2014, p. 2) notes that adopting SaaS is the best way of avoiding the expensive software licensing costs because SaaS licensing is relatively lower than that which a firm would incur if it were to pay for a licensing application. Third, adopting SaaS is beneficial to a firm because it reduces hardware cost. According to Seethamraju (2014, p. 3), because SaaS is hosted remotely through the Internet, this is beneficial to a company as it implies that a firm that adopts this application model does not have to invest in additional hardware. Securing software applications is usually a costly process for firms. Fortunately, the adoption of SaaS ensures that the SaaS provider is responsible for the maintenance of software security and its performance (Waters 2005, p. 35). This is also beneficial to a firm as it relieves a company from focusing on security of the application and its functionality as all these are done by the provider. SaaS model is also beneficial to a firm because its usage is scalable in the sense that if a firm requires additional service or a storage space, these can easily be accessed upon demand without necessarily having to install a software or hardware (Xin and Levina 2008, p. 14). Other significance of SaaS model includes improved utilization of resources, greater flexibility for innovation and enhanced communication with stakeholders. Differences between SaaS and On-premise Models Choosing between SaaS and on-premises often pose a big challenge to IT professionals. From the case study, it emerges that there are several aspects that differentiate SaaS model from the on-premises model. First, whereas with SaaS a customer pays for the software application as per the usage, such as on a monthly basis, on-premise requires advance payment for software, licensing, hardware and lab space (Waters 2005, p. 33) Second, whereas in SaaS the software and hardware are owned exclusively by the SaaS provider, with on-premise, hardware and the system platform used for running the application is provided by the customer. Third, SaaS has a higher security risk compared to on-premise considering that SaaS apps are accessed through the Internet while access to on-premise apps is on location. Additionally, whereas on-premise provides greater customization that depends on software vendor, SaaS model provides limited customization (Seethamraju 2014, p. 11). Lastly, whereas SaaS provider in control of the entire system and customer data, with on-premise model, it is the customer that is responsible for control systems and data belong to customers. QB2. The adoption of IT solutions in an organization is greatly influenced by the environmental factors and the same applies to the adoption of SaaS ERP system that is affected by environmental factors. In this article, the author identified a number of determinants and challenges the SMEs experience in adopting SaaS ERP system. First, stakeholders and competitive pressure was identified by the researcher as one of the key determinants and challenge associated with the adoption of SaaS ERP system (Seethamraju 2014, p. 10). Although the researcher found stakeholder and competitive pressure to have small influence in the adoption of SaaS ERP system, these factors played a critical part in forcing Autoco to adopt a SaaS ERP system. The second determinant is the product and vendor reputation. Studies have found that the vendor and product reputation has to be good and in business for a long duration. For this reason, Low (2011, p. 1007) suggest that firms that intends to implement SaaS ERP system must conduct due diligence on the capability of the vendor to ensure that the vendor chosen is that which has the capacity to deliver SaaS ERP system. Cost is another determinant for the adoption of SaaS ERP system. It was discovered that SMEs usually conducts a cost-benefit analysis on SaaS ERP system adoption and only adopts the system if the benefits likely to be reaped outweighs the cost of adopting the system (Seethamraju 2014, p. 12). The other factor that features prominently is the IT-readiness and a firm’s preparation for adoption of the SaaS ERP system. In this respect, it emerged that the decision to adopt SaaS ERP system was determined by the extent to which a firm was prepared to adopt the system, such as skill availability and infrastructural requirements. Other determinants and challenges include perceived security fears, service disruption and regulations, and change management challenges. To minimize the challenges associated with adopting SaaS ERP system, SMEs can do a number of things. Firs, SMEs should conduct due diligence to ensure that the vendor with the capacity to deliver SaaS ERP system is chosen (Rosario 2000, p. 21). Second, SMEs should ensure that they are prepared in terms of skills and infrastructure to facilitate seamless implementation of SaaS ERP system. Additionally, the firms should conduct a cost-benefit analysis to ensure that SaaS ERP system is implemented only when the benefits to be derived exceeds the cost of adopting and running the system. References Low, C., Chen, Y., & Wu, M 2011, ‘Understanding the determinants of cloud computing adoption,’ Industrial Management and Data Systems, vol. 111, no. 7, pp. 1006–1023. Myerson, J. M 2001, Enterprise systems integration, second edition. CRC Press, New York. Ronald E. G 2010, Design of enterprise system. Florida, Taylor and Francis Group, L.L.C. Rosario, J.G. (2000). On the leading edge: critical success factors in ERP implementation projects. Manila, Philippines, Business World. Seethamraju, R 2014, ‘Adoption of software as a service (SaaS) enterprise resource planning (ERP) systems in small and medium sized enterprises (SMEs). Inf Syst Front, pp. 1-18. DOI 10.1007/s10796-014-9506-5 Themistocleous, M., Irani, Z., & O'Keefe, R. 2001. 'ERP and application integration: exploratory survey', Business Process Management Journal, vol. 7, no. 3, pp.195-204. Themistocleous, M., Irani, Z., & Love, P.E. D 2002, Enterprise application integration: an emerging technology for integrating ERP and supply chains. ECIS 2002 Proceedings. Paper 88. Waters, B 2005, ‘Software as a Service: a look at the customer benefits,’ Journal of Digital Asset Management, vol.1, pp. 32–39 Xin, M., & Levina, N 2008, Software-as-a-Service model: Elaborating client-side adoption factors. Proceedings of the 29th International Conference on Information Systems (ICIS), AIS, Paris, France, paper 6. Read More