ERP Software: Delivery Model More Important than Features, but Peace of Mind is Tops—Part 1

Today’s blog is a guest post from Marcus Wagner, Founder and CEO of AcctTwo. This is the first part of a two-part series.

After having sold and implemented ERP and accounting software for hundreds of companies, many of them software companies, I’ve learned something surprising about what companies find most important when moving to a new system or technology. While it may seem counterintuitive, the software’s delivery model—how it’s installed, hosted, updated, and supported—is and should be more important than the specific features it has.

As a company chooses to move from one enterprise solution to another, the cloud provides better value, higher return on investment, lower total cost of ownership, and a pathway to upgrades and improved functionality; but these characteristics are not just some of the advantages of a cloud-based product. They are the advantages, and they provide value beyond the meeting of specific functional requirements. The product’s infrastructure itself carries value before the product specifics even come into play.

Here are two of these cloud delivery model characteristics, and how they provide value.

1. Multi-tenancy allows a software publisher to maintain only one code base for all customers.
Having only one code base allows for economies of scale that bring down the overall cost of the product, allowing cloud software publishers to invest more in the software’s functional capabilities and how it’s supported. In a legacy environment, upgrading one’s enterprise software is not that different from buying a new product. Each customer implementation of the new version is a separate and unique project, and any customizations would likely have to be re-implemented, costing time and development resources.

With the cloud, each new release is pushed out to all users at no additional cost, eliminating development work or the possibility of major bugs or errors specific to each customer installation.

Multi-tenancy allows for resource pooling, where a company accessing the system only uses the resources they need at any given moment, rather than having a certain chunk of resources reserved for them that may sit idle when not in use. Cloud-based products can redistribute those resources to other users of the system, maximizing efficiency and performance and reducing costs. Bugs or errors within an on-premises or hosted implementation of a legacy application are often specific to that installation and any customizations that were implemented. Tracking down the source and finding a solution can be like finding a needle in a haystack.

With one code base and shared data types in a cloud-based environment, problems can quickly be discovered, isolated, and fixed, providing customers with a more robust and reliable application.

2. The subscription model requires that software publishers win a customer’s business every year by providing value and high levels of service.
A cloud-based software publisher and/or its implementation partners can’t install your application, do some user acceptance testing, get sign-off, and then disappear into the sunset. The relationship between publisher or consultant and customer is a partnership. The customer will need solid support, advice and powerful upgrades that can change with and continue to support their business for years to come. This adds tremendous value to the product. Idea portals or feedback channels for requesting new functionality are crucial for the publisher to know where to take the product in subsequent releases. The publisher and consulting partners understand that without a product that changes with the customer base, and without high levels of service, customers can decide to take their business elsewhere. Moreover, with more and more SaaS products coming on the market, those options will only increase.

As an example, we recently sat down with one of our cloud ERP customers to talk about renewing their software subscription and to make sure there weren’t any add-ons or changes they might need as their business has grown and changed in the past year. We discovered that there were opportunities to improve our support processes that would provide them with better customer service. They had the option of changing partners or moving their business directly to the software publisher, but sitting down and hearing their concerns allowed us to improve our processes in a way that will benefit not only that customer but also our entire customer base.

This experience also taught us that we should increase the touch points we have with our current customers. Because our support was tied to the software subscription model, we were far more invested in improving our customer service than a company that installs a legacy system once, charges a large fee for the software and implementation and then provides minimal, if any, support going forward with very little incentive for improvement and very little recourse for the customer when things go wrong.

Check back on November 3rd to hear the final two tips on how a cloud-based ERP solution provides better value, higher return on investment, lower total cost of ownership, and a pathway to upgrades and improved functionality.

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