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blog | June 09, 2014

Two-Tiered ERP and How It Can Benefit Your Company

The use of an Enterprise Resource Planning (ERP) software system is incredibly widespread, and companies will pay a lot of money for the value the software provides. In fact,...

By WorkWiseSoftware

The use of an Enterprise Resource Planning (ERP) software system is incredibly widespread, and companies will pay a lot of money for the value the software provides. In fact, data from recent years has shown that global ERP sales are expected to exceed $45.5 billion per year and 1 out of every 10 dollars spent on software goes to ERP solutions.

The standard model of a two-tier ERP software system goes as follows: the corporate level of a company has an ERP solution and the various divisions or subsidiaries (global or national) have their own ERP. So in essence, a company will be running multiple ERP solutions at once.

The main reason for this is that each independent location may work better with a system more in tune with their business model, workflow, and business processes. This ensures that their special requirements can be met.

There are plenty of other benefits as well. For example, when the original ERP solution is very large, it can become very cumbersome and expensive to customize and maintain at various locations. Often times a company’s headquarters will have a large investment in their on-premise ERP software. But, it can be easier and less expensive to buy a smaller ERP package for a different location, especially if it is an agile cloud-based solution, because of the easier upgrades and lower costs (while not lacking real time functionality or visibility).

The future is looking bright for the two-tiered ERP software model. Back in 2011, for example, 48% of ERP buyers considered buying a two-tier ERP strategy for their ERP software (2010 at 32% and 2009 at 27%). Only time will tell as companies expand if the benefits will be enough to change the common mindset of having one set system company wide.

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