Enterprise Resource Planning or an ERP integrates data and core business processes in a company. A standard ERP software usually contains various modules that are specified for each department, like human resources, supply chain processes, accounting, inventory, and customer relationship. Underneath the surface, there are various ways to categorize ERP software.
Types Of ERP Based On Size Of The Enterprise
- Tier 1 Solutions
ERP systems categorized as Tier 1 solutions are mainly built for large companies, like multinational ones. These companies have a huge number of users while they process a huge number of transactions at the same time – even millions. It is imperative that the software that these companies should use will be able to work and carry on while handling all of these processes at the same time.
- Tier 2 Solutions
As compared to tier 1 solutions, tier 2 ERP systems are designed for businesses on a smaller scale. This means that these businesses or companies are only medium-sized but can have many branches and some number of users. Thus, it might be a little tricky to name the price of each ERP system in this tier, since different companies might require some certain functionality. It might be more ideal to assess the status of your company first before purchasing one, so that you will get the most out of your investment for an ERP system.
- Tier 3 Solutions
The last tier of ERPs can be the most ideal for smallest businesses. They are made for small- to medium-sized companies which is unlikely to participate in many countries or branches. Some Tier 2 and Tier 1 ERP providers have a smaller or downscaled version of their products which could be fit for various small businesses or companies. Usually, they are custom-made and depends on the needs of each business. This is why you should be able to assess what your business needs in order to select the proper tier and type of the enterprise resource planning software you are going to use.
Surprisingly, there is still another way to categorize ERP systems. These categories are based on the implementations of the ERP system itself.
Types Of ERP According To Implementation
- Cloud – Based ERPThis is a little bit self-explanatory, since we all know that cloud-based software is setup on a cloud server which can be accessed any time, anywhere. This means that information and data in your company is centralized, with little to no delay in the travel of this information. This is very ideal for multinational companies with many users that are processing a lot of business data and analytics in all of your branches. It significantly decreases the time needed to process reports, charts, and graphs since the ERP system will be able to handle the streamlined flow of information across locations.
- On-Premise ERP
On-premise ERP has the same concept as that of a cloud software, with no internet access. This means that you set up your system in an in-house data center and maintain it with the help of an IT service. The transfer of information is also streamlined, and you can actually use it without an internet access at any time. The data is almost secure as long as no one would attempt to steal your hardware. However, additional costs may arise since you are maintaining an office for the data center and you also might have to provide salary for an in-house IT technician.
- Hybrid ERP
Hybrid ERP is a combination of both cloud-based and on-premise ERP systems. This means that some of the business processes are being handled on the cloud, while the others are not. This is a good option for those companies that have a central branch with more branch locations from far away. By using a hybrid ERP system, the other branches will be able to provide a smoother and faster data flow to the central branch, while the on-premise ERP will process some of the tasks before generating a report to you. Hybrid ERP is also known as 2-tier ERP system, since it runs on 2-tiers of processing before generating a final report.
Take note that these types of ERP systems are just guides, and they are not that specific. Even though this loose definition of ERP types is being used, they are very helpful as they provide the idea on what ERP system each company head has to pick for his or her business.