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Guide · Terms

SaaS vs ERP: what's the difference?

SaaS and ERP are not two options to pick between — they describe different things. SaaS (Software as a Service) is a delivery model: software you use over the internet for a subscription. ERP is a type of system that runs a business's core operations. An ERP can be delivered as SaaS; they are not opposites.

Reviewed by Pathmanathan Lathesh, Founder and CEO · Last updated

A 3D render of a cloud, representing cloud and SaaS software delivery

By AlienX Engineering · Published · 4 min read

SaaS is about how you get the software

Software as a Service means you use an application hosted by its provider, usually in a web browser, and pay a regular subscription instead of buying and installing it yourself. Updates, hosting and security are the provider's job.

SaaS says nothing about what the software does. A messaging app, an accounting tool and an ERP can all be delivered as SaaS.

ERP is about what the software does

ERP describes the job: one system that runs the core parts of a business — sales, stock, purchasing, finance, reporting — on a shared set of data. How it reaches you (installed, or as SaaS over the internet) is a separate question.

Why the terms get mixed up

Because so many ERP products are now sold as subscriptions you access online, people hear SaaS and ERP together and assume they compete. The clearer way to think about it: decide what the software must do (that may be an ERP), then decide how you want it delivered and paid for (that may be SaaS). They answer two different questions.

Questions

Common questions

Can an ERP be SaaS?

Yes. Many ERP systems are delivered as SaaS — accessed online for a subscription. ERP is what it does; SaaS is how it is delivered.

Is SaaS always cheaper than installed software?

Not always. A subscription spreads cost over time and includes hosting and updates, but over many years the total can be higher. The right model depends on your needs, not a rule.

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