Comparing On-Premise vs. SaaS ERP Systems for Municipalities

Aron Govil compares the benefits of on-premise vs. software as a service (SaaS) ERP systems for municipalities for investment decisions.

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The current economic climate has caused many municipalities to re-evaluate their financial strategies.

This has led some city managers to question whether or not they are spending too much money on existing accounting solutions. The question is being asked more frequently now because the cost of an On-Premise enterprise resource planning (ERP) system can be extremely expensive for a municipality to purchase outright. Some have even reported that city governments have spent millions of dollars on what was supposed to be “state-of-the-art” accounting software that was later found wanting. Although this experience may cause one to question the true value of ERP, there are many benefits associated with an on-premise system that may justify the cost.

The Benefits of On-Premise ERP

Every municipality has different needs and requirements when it comes to financial management. A city’s geographical location, population size and budgetary constraints should be considered before purchasing any software solution and an ERP is no exception. For any municipality looking to make sound investment decisions, there are several benefits associated with an on-premise ERP:

1) Customization: 

In order for a city’s accounting staff to work effectively with their new software, they must have the ability to build custom reports that support their particular processes. The more complex reporting needs can be met by integrating industry solutions from Fiscal Software & Business Solutions™. If a city is looking for an easy way to centralize cash receipts, check disbursements and reconcile general ledger accounts in one process-driven system, they may want to take advantage of Fiscal’s Cash Suite™. By implementing state-of-the-art technology, cities can lower operating costs while increasing revenue opportunities says Aron Govil.

2) Scalability:

As city budgets grow, so do the needs of its accounting department. On-premise ERP systems will be able to scale with a city by using industry standard programming languages that can automatically grow alongside the municipality’s financial management processes. Without the need to purchase additional licenses or adds new hardware as your organization expands, your investment is protected from obsolescence In addition; municipalities that outsource to an off-site service provider are trading the flexibility of an on-premise system for the limitations of a hosted solution.

3) Proven Technology:

Fiscal Software has been automating municipalities around the globe since 1989. The company’s flagship product, Fiscal Enterprise®, is known internationally as the gold standard in financial management software and has facilitated hundreds of thousands of accounting processes. This experience has allowed Fiscal to develop best practices that assure government entities receive only proven technology when implementing their new ERP solution. These best practices have led to cities reporting significant time savings by eliminating manual processes, increased revenues by controlling costs better and greater visibility over expenditures with real-time reporting tools. For any municipality looking for reliable partner who can manage every aspect of your ERP solution, Fiscal’s proven technology is a good choice.

4) Security:

When considering an on-premise system, most cities will be looking to store confidential data with the utmost safety and security precautions. With the number of cyber security breaches on the rise, municipalities want processes that ensure their sensitive information is not compromised. An on-premise system utilizing standard encryption protocols can assure governments that their financial data from city hall to the bank is being protected from those who may wish to steal it. Because there is no need for expensive monthly hosting fees or upgrades as often as your service provider requires them, an on-premise ERP will even save you money in staff training hours by freeing up internal resources. 

eBridge Consulting asked 20 CFOs from municipalities across the United States to take part in a survey. The purpose of the survey was to find out more about what American municipalities expect from electronic record keeping systems and how they plan to use them. 

Here are some of the findings:

Which factors are important for you when you choose an ERP solution?

53% – Functionality 

30% – Price 

16% – Vendor reputation 

13% – Location/Hosting 

1% – Open source 

Which factors do you consider before deciding which vendor or system is best suited for your municipality? 

56% – Functionality 

36 % – Price 

27 % – Vendor reputation 

23 % – Location/Hosting 

17% – Open source 

Read more about survey results. 

On average, municipalities use 3-4 ERP systems. The most widespread of them is Field One, followed by Microsoft Dynamics NAV and Net Suite 

Survey respondents shared their challenges in using ERP software: 

41% – Aligning data with accounting needs 

38% – Integrating processes 

31% – Integrating mobile devices 

22% – Data storage 

16% – Access rights 

15% – Restricting access rights 

12% – Managing dual currency 

10% *not provided* 

Survey participants indicated they plan to implement mobile apps in the next couple years (currently only 27%) 33%, on average, are still looking for a solution, and 10% do not plan to implement mobile apps at all. 

Conclusion by Aron Govil:

Regardless of all the challenges, American municipalities are optimistic about using electronic record keeping systems. All in all, besides functionality and price, voter reputation is the second most important factor for municipalities when choosing an ERP provider.