Companies usually buy ERP (Enterprise Resource Planning) applications and set them up themselves with an in-house software and hardware team assigned to build the system around the applications. However, with the increase in demand for lower costs and faster turnaround times, hosted ERPs are fast gaining popularity.
A hosted ERP solution is when a company not only buys a traditional ERP application, but also buys the software and hardware services of a third party. This third party sets up the software, provides the necessary hardware to make the application run, and designs the system on which the client company will run on. The third party is outsourced and not in-house, so the client company doing the outsourcing does not need to worry about technical matters anymore.
When hosted ERP first appeared, many critics were against it. However, hosted ERP has been proven to have several advantages, and some of these are:
1.) Strict standards – A client company can specify standards it wants to be followed. Once the deal is signed, the third party provider is contractually obligated to deliver service meeting or exceeding the standards set by the client.
2.) Flexibility – If the client company moves locations, or adds other sites, it does not need to worry about moving the software and hardware system with it. The third party provider is tasked to do that.
3.) Low costs – The client company does not have to buy equipment and hire a team of an in-house IT team to add to its payroll. All it has to do is pay the services of a third-party provider, which is often lower in cost than buying hardware and hiring qualified people.
Hosted ERP indeed are gaining popularity nowadays. Its everything a company needed a software and hardware!