Choosing the wrong enterprise resource planning (ERP) system for your needs or working with a partner who doesn’t understand your business can lead to implementation issues. Such issues may include a poor return on investment (ROI), budget overruns, and underutilized systems.
When selecting ERP systems, businesses must have a clear vision of the system requirements and how they’ll align with internal business processes. If your company wants to purchase or upgrade to a new ERP system, what common types of ERP systems can you choose from?
This article will discuss the various types of ERP systems and how to choose the best solution for your company.
What is an ERP system and why is it essential for business continuity?
An ERP system is software that aids in automating and managing a range of business processes in human resources, inventory control, sales, accounting, and customer support.
An ERP has a modular design and functions as a centralized database for the entire business. It provides complete visibility into core business functions, providing agility, efficiency, and productivity.
Organizations implement ERP systems to aid in the day-to-day running of business processes, such as data management and business intelligence. Additionally, ERP reduces repetitive and manual tasks by automating core processes.
Whether you’re in the market for a new ERP system or need to upgrade your organization’s existing systems, you need to be aware of the types of solutions in the market. Finding an ERP software vendor that can give you the best service and support is also essential.
Every business has unique challenges and needs, and finding a comprehensive solution that meets your specific business requirements should be a top priority. Take the time to learn about the different types of ERP software and narrow your search to the solutions that meet your requirements.
Types of ERP systems
Choosing an ERP system is a significant decision with a long-term impact on your company. It takes companies 17 weeks on average to choose an ERP.
ERP based on build type
While finding a scalable solution that meets your needs is challenging, as you pick your ERP system, you’ll need to figure out what type of ERP works best for your business. Your business needs will determine which type of ERP system you choose.
Let’s take a look.
Custom-built ERP
With a custom-built ERP, your company’s unique processes and procedures inform the design and development of the ERP system. ERP vendors design custom solutions to closely align with an organization’s specific workflows, unlike off-the-shelf ERP systems that take more of a one-size-fits-all approach.
Ideally, you select an ERP development company that creates custom ERP software based on your business needs and organizational processes.
When opting for custom-built ERP software, you can choose to have it tailored to your specific requirements or industry. Large businesses with multiple interlinking internal processes often need highly customizable ERP.
Look for a vendor that allows for customization and data transfer based on your business requirements. Minimal customization options prompt you to spend more to customize the system or fix issues arising from a mismatch.
If you have an existing ERP that lacks certain functionality, you can opt to integrate additional modules into your system through a third-party support provider.
For example, after years of using their outdated Oracle E-Business Suite (EBS) system, a major European retailer discovered a functionality gap. Spinnaker Support developed a novel approach to bringing in the key features without needing extra Oracle licenses or a time-consuming upgrade.
Ready-made ERP
With ready-made ERP systems, you purchase off-the-shelf ERP software products from a selected vendor such as SAP or Oracle. Ready-made ERP solutions include basic, essential features and functionalities that address typical business requirements.
You can implement the software rapidly and immediately reap the benefits of the system’s standardized procedures and best practices.
Evaluate your unique business needs, budget, and scalability requirements before settling on a ready-made ERP solution. Make sure to consider core capabilities and what kind of support the ERP vendor offers.
ERP based on the deployment model
ERP vendors deploy ERP solutions using different models, including on-prem, hybrid, and cloud. Each deployment model has its perks, and deciding which one to implement depends on the organization’s priorities and requirements.
Here’s a closer look at each type.
On-prem ERP systems
The software and infrastructure are installed and managed on the organization’s premises with on-prem solutions. Your company controls the software and hardware, including all the maintenance and upgrades.
On-prem ERP software gives you complete control over the infrastructure, resulting in more robust security for your integrated platforms. However, implementation often requires a significant upfront investment. Your organization must also have an in-house team to maintain and update the ERP software.
If you have selected an on-prem solution and need assistance with maintenance, you can always opt for a third-party support provider like Spinnaker Support. We can continue supporting your company’s current ERP system, even if it’s reached the end of service and don’t wish to migrate.
Cloud-based ERP systems
With a cloud-based ERP solution, users can access the ERP software from any location with an internet connection.
Cloud-based ERP usually has lower start-up costs because your company doesn’t have to buy its hardware. The software vendor handles support, upgrades, and maintenance, allowing rapid scalability.
If your organization is looking to upgrade to a cloud solution, you can choose to enlist the help of a third-party support provider. For instance, a leading US Bank considered migrating their SAP ASE to AWS to benefit from cloud capabilities such as increased reliability, scalability, and reduced overhead.
When they switched to AWS, they turned to Spinnaker Support for assistance. The company’s performance and availability have improved, enabling them to handle their daily operations better.
Hybrid ERP systems
Hybrid software systems incorporate elements of both on-prem and cloud hosting. With a hybrid ERP, you’ll find some features and components housed in a cloud service and others on-premises. Hybrid solutions combine control and flexibility, allowing businesses to select the deployment options that are most suitable for their specific business functions.
ERP based on industry specification
Besides categorizing ERP systems based on the deployment model and build type, ERP systems vary by industry-specific customization. Because different industries have varying needs, ERP vendors can adapt their products to a specific industry.
Generic ERP
Generic ERP systems come as a complete solution that provides companies access to core and common ERP functionalities. Generic systems mainly feature financial management and accounting capabilities. A generic ERP system is suitable for businesses with standard processes or those that work well with a generalized approach.
Industry-specific ERP
This kind of ERP software typically meets the unique requirements of niche industries. Alongside generic features, these ERP systems have custom features suited for niche businesses. For example, Microsoft Dynamics 365 Commerce and SAP Retail enable inventory, order, and customer relationship management for retail businesses.
ERP based on Tiers
You can classify an ERP system into varying tiers based on size, complexity, and features.
Let’s take a look.
Tier 1 ERP systems
Software vendors develop Tier 1 ERP systems for large businesses with complex needs, such as multinational corporations. They design them for larger corporations meeting specific financial criteria, such as higher revenues, international operations, and market capitalization.
Tier 1 ERP systems often feature extensive modules and features that you can extend or customize to fit specific needs. They typically support various currencies and languages, making them appropriate for multinational corporations.
Companies with many users and requiring a complex system to meet their requirements can benefit from this ERP system.
Tier 2 ERP systems
Tier 2 ERP systems target multinational companies that don’t need Tier 1’s extensive capabilities. Tier 2 ERP works well for medium-sized to large businesses with one or more locations.
Tier two ERP users have moderate to complex needs but fewer employees than tier one ERP users. These systems combine functionality and complexity, offering the core functionalities necessary for operations across multiple locations.
Tier 3 ERP systems
Tier 3 ERP systems are suitable for midsize businesses that need basic support for different languages and currencies. These solutions have the basic features you need to run different business processes. These systems typically cost less and have fewer features than Tier 1 and 2 ERP solutions.
Tier 4 ERP systems
ERP software vendors design Tier 4 ERP solutions for small businesses that only need to handle basic day-to-day operations and don’t need advanced features like full inventory management capabilities. Tier 4 ERP systems can come as cloud-based solutions with simple components to incorporate into existing workflows.
Selecting an ERP system that meets your business needs
Getting a third-party support provider on board may help if you’re considering acquiring ERP software but need clarification on all the options. A third-party support provider can assist you in navigating the many available options and offer you cost savings on your existing ERP system.
Operational costs and vendor support costs can be an expense as you have to maintain your current ERP system as you plan on purchasing a new ERP. For example, the annual support for Oracle or SAP, which costs 17–22% of the original license cost and increases by 2–4% annually, can drain a company’s IT budget.
While researching ERP solutions, outsourcing your support needs to a third party can help you save money. Additionally, you can transform on your own timeline and opt out of the rising vendor maintenance fees.
For instance, Starkey worked with Spinnaker Support all through their transition to the Oracle Cloud to guarantee the maintenance of their on-premises Oracle systems.
Using Spinnaker Spinnaker, Starkey has had consistent, high-quality support while moving to the Oracle Cloud, all on their own schedule. Spinnaker Support offers reduced support costs and an improved security posture for enterprise software.
You can save on support costs and focus on your enterprise software strategy through third-party support options. Businesses can obtain comprehensive support for all software versions by partnering with a third-party support provider such as Spinnaker Support.
Besides that, Spinnaker Support can help you make better-informed decisions based on your business goals instead of your enterprise software provider’s roadmap. Spinnaker can fully support your existing ERP solution, giving you room to shape your digital strategy.
Conclusion
Companies often prioritize ERP systems that can effortlessly combine essential business processes and integrate with existing software. While multiple ERP solutions are available today, finding the right fit for your business operations takes time and significant effort.
Whether upgrading to a new software solution or looking for a completely new ERP system, partnering with a third-party support provider can give you time to decide on your next step. Spinnaker Support provides third-party support for several ERP ecosystems, including Oracle and SAP.
With their assistance, you can take charge of your enterprise software strategy through cost savings and support from experienced engineers. If you’re ready to partner with a third-party support provider, contact one of our experts today!