Choosing ERP is no easy task. There are so many different vendors and software choices on the market it can easily become overwhelming for your first go around. Companies that are even starting the upgrading process for a replacement ERP system can struggle to pick out a new one. Doing an ERP comparison is one of the best ways to tackle the decision making process. Below, we will take on the first step of an ERP comparison by breaking down each tier of the systems.
ERP systems can be broken down by functionality in three tiers. Tier one ERP gives the most functionality and efficiency, while tier three ERP is a more basic system for companies just starting out. The most important thing to remember in this ERP comparison is tier one ERP is not for everyone. Just because it is considered to be the highest level and highest functioning ERP doesn’t mean it will work for you. A small business with just one to three users will get the most ROI from tier three ERP, while a larger company will need the functionality of a tier two or tier one ERP system.
Tier One ERP systems are best suited for large companies that have multiple offices in multiple locations. They require the ability to have many users working on the same function at any time. This makes the ERP system more complex, allowing the company to customize and tailor the entire system to their exact needs. The software will have unique features that can’t be found in many other ERP systems. The more complex the ERP system is, the longer the implementation process will be and more expensive, running an investment total around $1 million or more.
Tier two ERP has some of the most options on the market because many businesses fit into this category. These are best suited for mid-sized and some small businesses. Tier two ERP has two available choices from most vendors. Either you can take the ERP system for what it is out of the box, or do some customization work to fit more of your needs. This allows for a lot of growth for the companies using these ERP solutions. You may start out just needing the original functions, but as you grow you can add on necessary functions which gives back a lot of ROI. Tier two ERP is much more affordable, ranging from an investment of $10,000 to $100,000.
Small businesses benefit the most from tier three ERP. This solution offers very little to no customization. Usually these companies are just starting out and simply need basic accounting functions to help them along in their business. Although these will satisfy the small business needs at the beginning, the downside is that they will most likely become outgrown and they will need to move into the tier two ERP space. These solution run under $10,000, some are even offered for free. The cheaper the solution is offered, the less automation you will get.
Doing an ERP comparison is a requirement when choosing software for your company. You need to take into account how many users will be on the software, how big your company is, what functionality you want to get out of the system and if you want the system to scalable for growth. Based on your answers to these questions you will know which tier you fall into and you can begin the second step of an ERP comparison by looking at specific vendors and software choices.