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The company I work for has installed SaaS1 and works has worked for it for several months.

Now, later on we figured out that we don't really know what the difference is between the regular OpenERP and the SaaS edition. Also, we want to update to SaaS2 and don't know how to.

Could someone please explain the main differences between these versions and how to update is. All feedback is greatly appriciated.

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The SaaS-X versions have additional features compared to LTS versions.
The migration from a SaaS-X version to the next SaaS-Y version is automatic. You can contact online@openerp.com to ask what is the status for your instance.

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I guess it's my fault for not mentioning this, but we don't use OpenERP Online. We have SaaS locally installed.

Big mistake. Chances are you are now stuck in a version you will never get out of, just because you went playing in a development platform without understanding its release cycle. Never-ending CSV exports/imports are your only hope. (or a supercharged Enterprise contract).

@Fabrice: can you explain a little why he can't get out of it? or why he would want to? For example is it impossible to update saas~1 to saas~2, etc ...? Or maybe to troublesome (because you have to do that much more often then if you could keep with a x.0 until it falls out of support)?

Why he would want to: if he wants a feature of a later release. Why he can't get out of it: because SaaS-2 has datamodel changes compared to SaaS-1. And that the SaaS-X releases are only supported on OpenERP SaaS. The only way to update if you are on premise with a SaaS-X version is by doing it yourself: it's possible but very complicated/has a steep learning curve.