Private cloud ERP might feel safer, but SaaS ERP offers a better compliance model for biopharma by reducing validation overhead, cutting costs, and enabling continuous compliance and innovation.

SaaS ERP vs Private Cloud: A Better Compliance Model for Biopharma

Life sciences companies use enterprise resource planning (ERP) systems to manage complex business processes and optimize operations for growth and efficiency. Governed by stringent regulations, life science manufacturers must maintain tight control over the entire manufacturing process from raw materials through distribution to ensure quality control across the product lifecycle. They must also be able to track product batches and sub-batches to ensure patient safety.  

Many biopharma and medical device companies still run their ERPs on premises or in private cloud environments. Leadership often assumes that isolating the ERP from a SaaS model is necessary to maintain a change-controlled environment. That familiarity can feel safer—but it comes at a cost. Traditional ERP vendors often reinforce this mindset, promoting outdated deployment models that hinder innovation and aren’t built for growth. 

But not all cloud deployments are created equal. Many so-called “cloud ERPs” are simply traditional systems rehosted in a private cloud, still requiring manual patching, re-validation, and costly maintenance. In contrast, a true SaaS Cloud ERP offers a fundamentally different model—with built-in compliance capabilities, customer-controlled updates, and platform-level security that reduce both risk and complexity. Private cloud solutions simply can’t match these capabilities. For biopharma companies striving to modernize, the distinction is critical. 

That’s why growth-focused technology leaders in the life sciences are embracing SaaS ERP. In 2024, 40% of pharma and life sciences company leaders reported running all operations are in the cloud, while another 55% expect to be fully cloud-enabled within two years.

4 Reasons Why SaaS ERPs Streamline Biopharma Compliance

While traditional ERP vendors depend on fear to make technology leaders believe that a private environment offers greater control over how and when solutions are updated and re-validated, this mindset is a step backward for organizations focused on growth through the latest technology, security, and data capabilities.  

In reality, the following facts dispel this myth: 

1. SaaS ERP solutions handle CSV compliance without complexity 
2. SaaS ERP reduces compliance costs 
3. SaaS enables continuous compliance 
4. SaaS spurs biopharma innovation 

1. SaaS ERP solutions handle CSV compliance without complexity

Best-of-breed SaaS ERPs, such as Microsoft Dynamics 365, support computer system validation (CSV) for their clients, as required by the US Food and Drug Administration (FDA), European Medicines Agency (EMA), and other regulators. Microsoft provides advanced security controls, patches, compliance updates, and infrastructure maintenance, simplifying infrastructure management and regulatory responsibilities for their clients. They also issue a constant cadence of innovation, providing new features and functionality. However, these on-going updates are not automatically pushed to life science customers, rather they are carefully scheduled by the customer.  

To be specific, Microsoft does not require life science customers to take proactive quality updates (PQUs), and Microsoft allows life science customers to skip two of their four updates each year. This minimizes the validation overhead for customers to remain in a change-controlled environment while maximizing the opportunity to leverage the most current features, data analytics, and security available in the market. Microsoft partners with ISVs, like Merit Solutions, to advance the Microsoft audit logs, electronic signatures, security controls and features to meet FDA, ISO, GMP and other compliances. Life science companies in private environments must navigate these processes on their own or have an on-going dependency on their software vendor as well as their validation team. If they defer them to postpone the burden of re-validation, they may run outdated software that lacks security patches and regulatory updates, increasing the risk of data exposure and regulatory fines due to non-compliant processes. 

2. SaaS reduces overall compliance costs

With Microsoft D365, companies pay a monthly subscription fee for services and gain platform level compliance certifications to meet global regulations such as:  

1. SOC 1, 2, and 3 
2. ISO 27001 information security management 
3. ISO 27018 Code of Practice for Protecting Personal Data in the Cloud 
4. ISO 27701 Privacy Information Management System 
5. ISO 9001 Quality Management System 
6. Health Insurance Portability and Accountability Act (HIPAA) 
7. GxP 
8. GDPR 
9. and more

The ISV solutions built within D365 automatically include platform-level compliance. With a traditional or private cloud deployment, life science companies must pay for dedicated GxP-compliant hosting; in-house teams to oversee patching, validation, and security; regulatory compliance experts; and custom disaster recovery plans — all of which are standard in SaaS ERPs.  

3. SaaS enables continuous compliance

SaaS ERP solutions empower life sciences teams with modern automated validation tools to validate incremental updates. As a result, they can maintain an agile and efficient approach to meeting fast-changing regulations, such as data integrity, audit trail, and electronic records management. Biopharma companies with private cloud ERPs typically use manual processes to ensure compliance and perform full revalidations every few years, increasing the time, cost, and risk of violations as they work to meet regulatory requirements. 

4. SaaS spurs biopharma innovation

In the new frontier of AI, life science experts (partners) use Microsoft tools to deliver the systems customers require while helping to ensure a change controlled environment is always maintained. Customers gain the efficiencies needed to increase capacity, drive efficiency and remain compliant.  

Some ERP specific use cases of AI for Life Science include: 

• Contextualized Information in ERP which use Microsoft Co-Pilot to surface SOPs, training, or analytical methods directly within D365 Finance & Supply Chain

• R&D and Process Optimization leveraging Azure AI models analyze ERP-linked IoT data to optimize process yields

• Portfolio Investment Decisions that drive AI-informed analysis of FDA filings can identify market gaps

• CGT and Clinical Logistics which use AI to model risks in cell and gene therapy logistics

• Supply Chain Resilience through D365 Finance and Supply Chain AI-driven insights help navigate supply disruptions

• Quality and Compliance analytics that use NLP in D365 and Co-Pilot assists in analyzing QMS data

In addition, SaaS ERPs help ensure data integrity and traceability with immutable audit trails, version control, and role-based access, streamlining FDA inspections and GxP compliance.  
 
With traditional or private cloud solutions, siloed data and lagging upgrades may hinder companies’ ability to fully analyze business performance and user interactions, increasing compliance and security risks and slowing the pace of innovation. Those who don’t take advantage of a true SaaS solution are not fully benefiting from the cloud. 

Automate Compliance Processes with a SaaS ERP 

Private cloud ERPs promise greater control but enforce lagging, reactive processes that harm data security and compliance over the long term. With a SaaS ERP, biopharma companies obtain built-in compliance tools, automated updates, and continuous validation capabilities that simplify these processes. They also gain access to advanced AI technologies that enable teams to find and develop life-saving therapies that create a competitive advantage in the marketplace.  

Merit Solutions offers a customized solution that advances the finance and operations capabilities of the SaaS-based Microsoft Dynamics 365 ERP for the life sciences industry. Merit for Life Science provides industry-tuned quality and compliance, procurement and production controls, materials management, production, and quality and supply chain planning processes. This SaaS ERP natively works with other Microsoft solutions, such as Outlook, Office 365, and Power Platform. As a result, biopharma companies can easily combine business, market, and third-party data to uncover new insights. 

Contact us for more information and a personalized Merit for Life Science demo. Let us show you how our SaaS ERP can help you achieve continuous compliance, reduce costs, and accelerate innovation.  

FAQ: SaaS ERP vs Private Cloud ERP