Does SaaS ERP Exist?

A few months back, I came across a question on an IT Toolbox message board asking "Does SaaS ERP really exist?" The original poster said that the only company anyone had told him about was Netsuite. Of course, I took the opportunity to respond, and I've copied my notes here (with minor edits to update info). The entire thread is an interesting read for anyone in the software as a service industry, as it indicates a lot of confusion about what SaaS is, and some common misperceptions about the limitations and benefits of the SaaS model.

My response to the original poster was:

Alan, I'll respond to question #3 - Why are there so few SaaS ERP vendors? First, let me give you my caveats: I'm VP Marketing at a SaaS ERP vendor, Plexus Systems (thanks Molly for mentioning us!) We're not appropriate for your situation, so I feel like I can make a few points without coming across as "salesy."

I speak at conferences about SaaS on a regular basis, and when I describe my company as a provider of ERP systems for manufacturing, you can almost hear the groans. In the high tech community, ERP is widely considered to be a mature (i.e., dull) market with very slow growth, and the industry is dominated by a few very large players. At the same time, writing a new full-blown ERP application is a massive undertaking. Given that confluence of circumstances, why would any hot young company (the majority of SaaS companies are startups or first-stage growth companies) want to attack that market? That leaves you at the mercy of the large providers who are already in the market (e.g., SAP and Oracle) who will slowly bring SaaS solutions to market, trying not to cannibalize their existing sales, and a small group of upstarts (like my company) who have already made the transition and are focused on one specific market (for us, discrete manufacturing).

Because most SaaS companies are new(ish), most of the solutions they are providing are focused on individual departments (e.g., sales) or functions (e.g., transaction processing). They simply haven't been around long enough to offer an enterprise-class solution that spans multiple departments, as an ERP system does. So, my list of SaaS ERP solutions would include: 1) SAP's Business ByDesign (a huge boost to the market, when they finally launch it) 2) My own company, Plexus Systems 3) Glovia (although their SaaS solution seems to have vanished recently) 4) Workday (though this is really human capital management for now, they will be a more full-blown ERP solution eventually) 5) NetSuite (when they started, they weren't really an ERP system - they competed with Quickbooks more than anything else. However, they've been adding functionality and trying to go up-market with these new functions, and they're a smart company, so I expect them to succeed) And, of course, there are dozens of very small companies that offer very specialized solutions for individual markets.

I hope this is helpful.