Classifying systemic differences between Software as a Service- and On-Premise-Enterprise Resource Planning

Björn Link (Institute of Information Management, University of St.Gallen (HSG), St. Gallen, Switzerland)
Andrea Back (Institute of Information Management (IWI), University of St. Gallen, St. Gallen, Switzerland.)

Journal of Enterprise Information Management

ISSN: 1741-0398

Publication date: 12 October 2015



The technological innovation of Software as a Service-Enterprise Resource Planning (SaaS-ERP) opens several relative advantages, which may be realized by choosing the proper operation mode. Thus a company looking for a new ERP system faces the question: When and under what conditions does it make sense to choose a SaaS-ERP system? The paper aims to discuss these issues.


The relative advantage criterion of the diffusion of innovation theory, derived as operation mode differences, determine the conditions under which SaaS- or On-Premise-ERP is preferable: a classification of all main systemic operation mode differences between SaaS and On-Premise for the more complex ERP systems is presented. The systemic differences were identified by analytic generalization using triangulation between a literature review and a multiple case study with four ERP producers.


The most significant decision factors between ERP operation modes are flexibility, customization, cost, and operation and maintenance. General strategies have been derived by bringing the theoretical reasons together with the operation mode difference criteria. Typical criteria for selecting SaaS-ERP are a lack of IT-capacity or capabilities, as well as high need for flexibility, due to business development, seasonality, growth, collaboration and/or expansion. On-Premise-ERPs should be selected if specific or strategic resources would be outsourced or when major customization is a need.

Research limitations/implications

Case research is limited in that it reveals only ERP producers’ view and omits outlying cases.

Practical implications

The findings implicate that ERP selecting customers should consider and expand their criteria for ERP selection by operation mode criteria.


The classification of the most essential operation mode differences allows, for the first time, ERP selecting customers to design selection strategies. ERP selecting companies should strategically favor the operation mode that best suits their respective organizational characteristics so as to obtain the best possible support from the ERP operation modes.



The authors would like to thank all the interviewees from ABACUS, Microsoft, myfactory and SAP, as well as all the other individuals who have provided me with information or enabled me to get access to the research field.


Link, B. and Back, A. (2015), "Classifying systemic differences between Software as a Service- and On-Premise-Enterprise Resource Planning", Journal of Enterprise Information Management, Vol. 28 No. 6, pp. 808-837.

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