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Two Tier ERP Strategy

Two Tier ERP Strategy-Why do some big companies go to all the cost and expense of maintaining two software platforms to manage their business and automate back-office functions?

Surely a two-tier enterprise resource planning software system – one used by a parent company, say, for financial and HR needs and the other for remote subsidiaries with specific operational and foreign language needs – is complex and creates difficulties.

But large corporations nevertheless adopt a two-tier system because the parent company needs a platform for global financial while personnel management and subsidiaries need one both to support regional objectives and integrate with the corporate system.

This is referred to as a Tier 1 and Tier 2 solution. It can involve software from different companies.

The differences

Tier 1 ERP systems are usually found operating within companies that have  sophisticated environments requiring complex task management by senior staff. Consequently, they are expensive and will often take some time to implement.

Tier 2 ERP platforms are more specialized and address specific operational needs including the daily running of the business in areas such as oil refining, education or asset management.

There are market leaders in both areas. At the Tier 1 level, the corporations are large and well-recognized providers — Oracle and Microsoft, for example — while specialist ERP providers can be quite smaller. Leading names in this sector include NetSuite and Syspro.

But why go to all the cost and expense of maintaining a multiplatform, highly complex arrangement like this? Surely it creates additional operational difficulties when it comes to integrating these systems?

Integration will always be a priority for ERP developers. Many are aware that companies require their software to run well with others. This means that there is an emphasis on fast integration and a recognition that one ERP platform cannot cover all the bases for big companies.

When considering platforms for a multitier brief, it’s important to use those that are most customizable and have been employed in similar roles. They can mean cost savings as well. For example, the head office can share ERP templates with subsidiaries to save money designing their own.

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Article Credit: ToolBox

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