Your finance department has been manually reconciling spreadsheets each month to report monthly revenue while all sales representatives push the complex usage-based contracts through a manual system that does not connect back to finance—this led to lots of frustration and wasted time for everyone involved (a lot of time).
You are looking for a solution that will not only help with the complexity of billing for different licenses based on a usage contract but also allow your finance team to manage the revenue accounting process while meeting all of the requirements for ASC 606 compliance.
This guide outlines several core vendor platforms to help you select the right saas erp software that can support multi-entity consolidation and recurring billings without completely disrupting day-to-day operations.
What You Need to Know About Subscription Finance
The first thing you need to do is understand the core realities of subscription finance. Purchasing the wrong solution can have serious negative consequences.
If a vendor offers a generic cloud tool but cannot accommodate changes to contracts, you are wasting your time and money. There are literally hundreds of vendors trying to sell you a solution to one of the most complex problems you face as a subscriber business owner. You must look beyond the sales pitch and focus on the data structure.
Revenue always wins over basic accounting ledgers: The biggest reason for upgrading to a new system is due to the increased complexity in the revenue recognition process and not just because new systems are easier to use. Under ASC 606 and IFRS 15, you are required to account for every dollar in your business accurately.
Billing architecture is the most important selection you will have: Determine whether your billing process will remain within your primary system, or if it will take place in other third-party applications such as Stripe, Chargebee, or Zuora.
TCO includes much more than simply the license cost: For instance, you need to consider subscription fees as well as the cost for implementation, services, and any necessary cleaning of your data; all of these costs will ultimately dictate your true total cost.
How to Choose SaaS ERP Software That Works
Many people looking for SaaS ERP software automatically think standard cloud accounting. This is a mistake. When evaluating saas erp software, you must look beyond basic general ledger capabilities.
For example: A manufacturer is primarily interested in issues related to inventory and the supply chain. Recurring subscriptions, usage fees, and Net Revenue Retention (NRR) are all critical metrics for software companies. To fully understand the importance of MRR, ARR, and customer churn, you need to have a platform capable of processing and managing those elements as they relate to your company.
The Revenue Recognition Challenge
As contracts change, your current solution is unable to keep up with the changes.
Vendor upgrades, downgrades, cancellations, or usage overages all break traditional accounting processes. Once your accounting team spends 40-80 hours monthly fixing revenue recognition issues in spreadsheets, it is time for a real system. Conventional accounting tools cannot accurately manage multi-element arrangements and bundled services.
Limits to Integration and Architecture
Do you prefer to have all your tools in one location or are you open to using several separate systems?
This is the key consideration. There are companies that have built-in billing capabilities within their main products. Other companies may prefer using a product like Maxio as a dedicated revenue recognition solution preceded by a CRM such as Salesforce and combined with a data warehouse for analytics purposes.
In either scenario, putting these pieces together will take significant work.
Fast and reliable middleware and API connectivity will be critical for this integration. A poor transition from quote to cash will create an enormous data cleanup project, requiring many months of work.
Understanding Hidden Implementation Costs
While license fees may seem low, going live with a new software system can be very expensive.
A rapid launch is not necessarily indicative of a successful launch. A considerable amount of your budget will be used to transfer historical data, redesign your chart of accounts and retrain your staff regarding the new software. Typically, vendors quote the cost of their software only, but do not include the high cost of engaging implementation partners. You can expect to spend several months cleaning up your historical contract data prior to ever logging into the new software.
The Core SaaS ERP Software Shortlist for Subscription Operations
Here are some core vendors that you should consider based on the actual operating model, implementation model, and facts for subscription operations. Choosing the best saas erp software requires matching platform capabilities with your actual billing model.
1. Oracle NetSuite
Oracle NetSuite is a large player within the middle market for software applications. It does provide a broad set of applications that can centralize financial, billing, CRM, and reporting in one place (one single database).
Many growth companies choose Oracle NetSuite for its support of multi-subsidiary financials as well as for the Advanced Revenue Management application that provides very solid support for complicated recurring billing.
The typical contract value for an Oracle NetSuite implementation runs anywhere from $100,000 to $500,000 and a company can expect to go live between 4 to 9 months after beginning to implement.
A major downside to Oracle NetSuite is based on its size - the strength of its breadth means that it takes longer to set up than finance-only products. The need to have a contract value determined prior to knowing how many modules will be needed and the number of users is difficult.
2. Sage Intacct
Sage Intacct is a very different approach; it is a finance-first platform. Sage Intacct does not attempt to be a one stop shop for a company (does not attempt to do everything).
Sage Intacct specializes in dimensional reporting, multi-entity accounting and deep revenue recognition workflows. Therefore, Sage Intacct is well-suited to finance-led organizations that would prefer to keep their existing CRM and operational tools in place.
The starting price for entry in Sage Intacct is roughly $9,000 per year, while the pricing for mid-market rollouts can range from $25,000 to $75,000 annually. It generally takes between 3 and 6 months to implement.
You will need to have an adjacent system for billing and the planning components and should not be evaluated against an all-in-one suite; rather, evaluate this product as a specialized finance core solution.
3. Microsoft Dynamics 365 Business Central
Business Central is the natural next step for companies growing out of QuickBooks or Xero.
The Microsoft 365 ecosystem integrates finance, sales, and operations. Microsoft Dynamics 365 Finance, when coupled with most of your employees established within Azure-based infrastructure, is a sound investment for the mid-market firm or just as this small- to mid-sized organization looks to continue growing.
$80/user monthly average cost.
Three year overall investments will range from $75,000 to $400,000. As for deployment timelines, in general expect a timeframe of two to six months. This was not the case years ago, when the only way to build a Microsoft Dynamics 365 solution was through the existing subscription tools from within the Microsoft Dynamics 365 suite. The subscription tools have made significant progress in terms of usability, however, there may still be situations that require additional add-ons due to the complexity of variable usage based pricing.
4. SAP S/4HANA Cloud
Traditionally, SAP is enterprise software that is designed and developed with a standardised global process approach.
Many organisations have moved to the "public cloud" edition to standardise finance and operations across many different countries. You will have to implement the discipline to ensure you have fit your business to the standard model defined by SAP.
The public cloud edition will set you back approximately $180/user monthly. Overall costs can run between $150,000 and $600,000, along with projected deployment of three to six months.
While it is advisable to treat the public cloud version of SAP S/4HANA Cloud as distinct from the highly customised and private cloud solution, one should expect to invest substantial amounts of money and possibly need as long as 18 months to deploy.
5. Microsoft Dynamics 365 Finance
Similar to Business Central for small to medium-sized businesses (SMB), Microsoft Dynamics 365 Finance targets the complex enterprise environment.
Microsoft Dynamics 365 Finance integrates heavy financial management functionality with the full power of the Power Platform (i.e., Flow, Desktop, PowerApps, etc.) along with Dynamics CRM. More importantly, Dynamics 365 Finance is geared specifically to organisations that operate on a global scale and have deep global compliance requirements, along with large amounts of transactional data.
Contract value for Dynamics 365 Finance will typically exceed $150,000 to over $1 million, with a base cost of approximately $50/user per month. It will take around 6-14 months for an entire launch depending on what you are using and also how you build out your licensing plan with Microsoft’s ecosystem advantage.
6. Oracle Fusion Cloud ERP
Oracle Fusion Cloud ERP is an Oracle product that is completely enterprise level.
Oracle Fusion Cloud ERP uses advanced reporting and analysis capabilities to support financials, procurement, risk management, compliance, and deep analytics. Consequently, it is used by major corporations that have extensive global financial needs as well as separate from NetSuite.
Oracle Fusion Cloud ERP is highly configurable. Pricing can vary from $400,000 to over $3 million. Launch times can take from 9-18 months.
The level of functionality that this platform has would be considered extreme overkill for a small software company that only needs simple multi-entity accounting functions. Do not use Oracle Fusion if your needs will not be that of full compliance and a demand for global capability.
7. Odoo
Odoo is a platform based on an open-source modular approach to ERP software.
Odoo has many applications ranging from accounting to sales, subscriptions, and inventory management. This makes it a popular choice among start-ups and small businesses to adopt the application module by module. It has a very low entry point for new users.
The average cost of the Odoo subscription is about $24.90 per month. Total contracts can range from $10,000-$80,000. An average of 1-4 months for implementation.
It is important to note that even if the Odoo subscription is low, that does not mean this will be an inexpensive project. There will still be a cost of data migration, partner assistance, and future upgrades.
8. Acumatica Cloud ERP
Acumatica Cloud ERP is an extensive cloud-based accounting software solution designed primarily for the distribution, manufacturing, and project accounting marketplaces.
Mid-market companies select Acumatica for its highly flexible workflow and usage-based licensing model.
Pay an actual cost based only on the resources you consume, rather than paying for user access (many SaaS platforms require upfront payment).
Pricing is extremely customized, and contracts can range from $75,000 up to $350,000; the initial work prior to signing a contract can take 4 - 8 months.
It is very beneficial for businesses that perform physical operations but is much less beneficial for a pure-play software company with complex subscription contracts as its one prominent issue.
9. Infor CloudSuite
Infor CloudSuite offers cloud software specifically for industries. This includes manufacturing, healthcare, and hospitality. The software contains many industry-specific processes. The cost of implementing the software can range from $300,000 to over $2 million, and implementations can take 9 - 18 months.
Unless your software company has a highly complex physical supply chain, this is probably not the right software.
10. Epicor Kinetic
Epicor Kinetic focuses entirely on manufacturing. Epicor handles three different areas of manufacturing: discrete manufacturing, supply chain, and shop floor. Epicor currently has automotive suppliers and defense companies as customers.
Epicor's pricing is approximately $100 per user, per month, with a total contract range of $100,000 to $500,000; implementation can take 5 - 10 months.
Epicor has appeared on many software review sites as one of the top software platforms available. Epicor does not fit well within the pure subscription business category. Evaluate Epicor only if you manufacture physical goods along with your software.
How to Evaluate SaaS ERP Software
Do not use standard software scores to choose a software solution. Create a specific evaluation matrix.
The software vendor must be able to demonstrate actual workflows relevant to your business processes during the demo. Ask them to show you an example of a mid-term contract upgrade, a usage overage, and a foreign currency invoice being processed in real time during the evaluation demo.
Key Scoring Areas
The most important area for your scoring matrix should be revenue recognition. Your revenue recognition process must allow you to manage bundles, modifications, and other complex contract details.
Your quote-to-cash process should also be reviewed, and a quote should automatically create all of the necessary billing schedules and revenue schedules in your CRM software. Manual re-entry will lead to inaccuracies.
Integration architecture should also be evaluated, including APIs, data export restrictions, and the ability of finance to provide role-based access control and audit trails without having to call IT.
International and European Compliance
If you do business across borders in Europe, you will need to validate that the software is compliant with local laws, including VAT, e-invoicing, and payroll rules. It is also essential that you understand the data residence laws affecting your business and are able to successfully perform multi-currency consolidation (i.e., combine all the currencies into one total) before signing a contract with the software vendor.
Making the Right Choice for Your SaaS ERP Software
Lastly, keep in mind that you should not necessarily look for the best all-around software. You should select software based on how closely its data model aligns with your actual revenue recognition model.
For example, a venture capital-backed startup that bills based on high usage volume will need a different software stack than a multi-national enterprise that sells a standard set of annual contracts. Therefore, stop searching for a universal "winner" and find the exact software architecture that will enable your quote-to-cash process. Finding the right saas erp software comes down to matching your billing structure with a system that automates complex revenue recognition.
Finally, evaluate your success by measuring the amount of work your finance team will no longer have to do at the end of the month.
If your finance team continues to download CSV files to calculate deferred revenue after implementing the software, you purchased the wrong software solution. Instead, purchase the software product that supports your operational model, aligns with your internal technical talents, and provides clear total cost of ownership information before you sign a contract.
