Vormittag Associates Inc., known as VAI, ranks among the latest enterprise resource planning (ERP) vendors to pursue software-as-a-service (SaaS) options for customers. MSPmentor noted the pattern in mid-2009, citing moves from SAP, Oracle, NetSuite, and SunGard. But VAI’s move also involves mindSHIFT, the fast-growing managed services provider. Here are the details.

VAI, based in Ronkonkoma, N.Y., recently announced a SaaS option for its S2K Enterprise Software Suite. VAI targets the distribution, manufacturing, retail and service industries with its ERP software and services. The company tapped mindSHIFT as its managed hosting partner. The S2K SaaS solution is now on offer, with pricing starting at $150 per user, per month.

Joe Scioscia, vice president of sales at VAI, said competition influenced the company’s decision to provide on-demand ERP. “Many of our competitors were starting to offer SaaS solutions,” he said. “We saw that as something we would have to offer from a competitive standpoint.”

But VAI also saw an opportunity for SaaS in the SMB space, where increasing IT complexity stretches in-house IT resources. “Managing a complex IT environment really requires a full-time staff to do that and, frankly, those businesses might not have that kind of staff or might not want to hire that kind of staff,” Scioscia said.

For SMBs, the SaaS option eliminates hardware costs and reduces the technology management cost of day-to-day operations, he noted. And, as a side benefit, SaaS makes software a pay-as-you-go exercise as opposed to an up-front capital expenditure, he added.

“It’s really become a nice solution for the small and mid-size business from a cost perspective,” Scioscia said.

Scioscia, however, doesn’t see SaaS as completely replacing on-premise solutions.  He said he expects to see VAI’s business mix as 75 percent on premise and 25 percent SaaS in 12 month’s time.

Two Versions

VAI offers two versions of its SaaS solution: multi-tenant and single-tenant. In the latter version, “we carve out a partition on the data center where the customer would get a specific library for their own programs and data and any modifications that we might make for them,” Scioscia explained.

Scioscia believes the single-tenant version will be the more popular option among ERP customers.

“If you talk about CRM or payroll …  multi-tenant can work pretty well,” he said. “When talking about an enterprise ERP rollout, we see that having your own personalized environment in the data center as the way to go.”

Where mindSHIFT Fits In

Scioscia said VAI’s hosting vendor, mindSHIFT, was selected for  a couple of  reasons. For one, VAI had worked with the company in the past on projects, so the comfort level was there. In addition, mindSHIFT runs an office 15 minutes away from VAI’s headquarters, Scioscia noted. Other factors in mindSHIFT’s favor included SAS 70 certification and the ability to host Windows, Unix, Linux and IBM platforms.

“They were definitely robust enough to handle what we felt would be the type of customer we would be bringing to them,” he said.

The takeaway? More software vendors, especially those with SMB aims, will be offering SaaS as another way to reach customers. MSPs able to meet the specialized hosting requirements of ERP may be able to take advantage of this trend.

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