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blog | April 15, 2015

Two-Tiered ERP: Pros and Cons

ERP (Enterprise Resource Planning) software is becoming more and more common as companies are seeing the value provided can exceed the costs. In fact, data from recent years has...

By WorkWiseSoftware

ERP (Enterprise Resource Planning) software is becoming more and more common as companies are seeing the value provided can exceed the costs. 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. A new trend emerging is two-tiered ERP. Let’s take a closer look at what exactly this new trend is.

What is two tiered-ERP?

It is essentially a model for software where the headquarters of a company uses one ERP solution, but the different divisions and other locations are allowed to choose a different ERP vendor. So, multiple ERPs would be running under the same company.

Why would a company use it?

The main reason is that different parts of the company have different needs, budgets, and workflow. Using two-tiered ERP, different locations can get the best fit for them, which is going to help the company. In addition, it can be more affordable to go with multiple ERP’s on a smaller scale rather than having one gigantic ERP solution.

Why would a company not use it?

If people from various locations all need a centralized access to one system, then it would be best to keep it to one ERP. Also, more ERP solutions mean more ERP implementations, maintenance, and customizations. Meaning, each location that got a new ERP would need a certain amount of staff and infrastructure to handle the ERP on its own.

The two-tier ERP is getting more and more popular. Back in 2011, for example, 48% of ERP buyers considered buying a two-tier strategy for their ERP software (2010 at 32% and 2009 at 27%). It will be interesting to see how these numbers change with the increase in changes to ERP, such as cloud ERP.

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