Hosted ERP allows companies to avoid hiring their own information technology professionals to maintain a system.
A hosted enterprise resource planning (ERP) program is an Internet-based tool that uses computer technology to help companies manage their business processes, from accounting to inventory to human resources. With a hosted ERP, the software is maintained by a third party, the ERP vendor, rather than being installed on the customer’s computers. The customer accesses the system over the Internet.
This type of ERP is considered by many people to be the ideal solution for small businesses that may lack the financial and human resources to support their own ERP system. With a hosted ERP, customers do not incur the additional cost of hiring information technology (IT) professionals to maintain the system or purchasing a mainframe computer to run the system. They also don’t have to pay software licensing fees.
A hosted ERP offers greater flexibility than installing the software on the company’s own system, so customers don’t have to worry about continually scaling the software as their business needs change. It’s relatively easy to simply buy more components if a company wants to add more features. Companies also save money because they can buy only the features they need, rather than investing in complex, expensive systems that are more than they need or can control. They also don’t have to worry about replacing the system as they outgrow it or as better systems become available. Instead, the ERP vendor updates the system.
Customers can often customize a hosted ERP for more efficient viewing and use by specifying what features they want in each component. Some hosted ERP solutions can also be synchronized with email programs or devices such as personal digital assistants (PDAs) and cell phones, making the program accessible anywhere, anytime. A hosted ERP allows users to manage their business processes from any computer, so they can do everything from tracking order requests to managing and tracking workflow.
Many vendors have long offered hosted ERP services as part of larger IT outsourcing packages, but offering standalone ERP is a newer trend. Some companies offer a hosted ERP for free and others charge a monthly fee for access. The monthly fee can be a flat fee or it can vary based on the number of users.
Free versions of hosted ERPs may have limitations, however, such as being accessible by only one person at a time. Even the paid versions may not be suitable for all companies. Some providers simply offer a scaled-down version of their more comprehensive systems for small businesses, and other vendors offer solutions built specifically for small businesses.