Once thought of as something only large enterprises do, outsourcing is now a viable option for companies of all sizes who are looking for efficiencies or to offload non-core tasks. One such option is to outsource the hosting and management of your enterprise resource planning (ERP) system. But what exactly is ERP outsourcing? What are its benefits?

What is ERP outsourcing?

In general, ERP outsourcing has three independent components:

  • Application hosting
  • Application management
  • Helpdesk outsourcing

Application hosting is what people traditionally think of as “hosting”, i.e. the idea of purchasing space and resources from a data center to host one or more software systems. Application management is handing off the “tactical” maintenance of the applications within your system, such as applying patches and updates. And helpdesk outsourcing is where the service provider becomes the direct line of support for your end users. All three components can stand alone as individual services with unique benefits, but when bundled together, they work in harmony to enable further efficiencies.

What are some of the benefits of ERP outsourcing?

There are numerous benefits associated with outsourcing, however, for expediency we’ll focus on three key benefits:

  • More effective use of capital
  • Improved service delivery
  • Ability to focus on core competencies

With outsourcing, capital expenses become operational expenses. Organizations exchange unpredictable IT expenses for a predictable, all-inclusive, monthly bill. No large up-front fees, no unplanned expenses, no surprises. Further, capital is freed up to be used on other strategic initiatives.

Companies can also expect improved service delivery backed by service level agreements (SLA’s). In paying your monthly bill, you’re paying for top-tier facilities, the latest technology, IT expertise, and application knowledge. This all translates into improved system performance, up-to-date applications and happier, more knowledgeable, end users.

Probably the most important benefit of ERP outsourcing is that it enables organizations to focus on their core competencies, rather than IT. Every business has finite financial and human resources, ERP outsourcing can free up resources so they can be invested in more strategic initiatives. This includes freeing up your current IT staff to focus on supporting those initiatives, instead of spending time on tasks that add little value to the bottom line.

Today’s business environment is more challenging than ever, and companies are hard pressed to reduce operational costs and optimally utilize resources. ERP outsourcing can be a strategic option to improving the bottom line.