ERP Manufacturing Insights

1, 2 or 3 ? Making Sense of Enterprise Resource Planning (ERP) Tiers

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ERP Tiers 1 2 3

1, 2 or 3 ? Making Sense of Enterprise Resource Planning (ERP) Tiers

ERP software solutions can be broadly categorized into Tiers.” Before you dive too deeply into research on particular ERP solutions, it’s helpful to know which category of ERP is most likely to fit your organization. 

Tier 1 ERP

A Tier 1 ERP is an extensive, highly customizable system typically implemented by multi-location, international companies. They have massive capabilities to handle big data at lightning speed custom programming resources to put very diverse company locations on one system. Tier 1 companies include SAP, Syspro, Microsoft Dynamics, Oracle, and NetSuite (which Oracle acquired). If you are a small to mid-size manufacturer with employees who previously worked with a large manufacturer, they will likely recommend an ERP system from one of these recognizable names. In fact, when you search online for Top ERP Systems by the company size, all the top solutions will be Tier 1, with few exceptions. For decades these companies focused on large enterprise organizations but they’ve also created niche solutions for smaller companies, such as SAP Business By Design, NetSuite Small Business and Dynamics 365

Is Tier 1 a good fit for you? If you answer yes” to most of the following questions, then you may want to include them in your search. 

  • Do you have or plan to dedicate at least one full-time position as system administrator/data analyst for your new ERP
  • Would you like a highly customizable solution? 
  • Are you willing to consider the most expensive ERP solutions? 
  • Do you have international locations? 
  • Do you multiple locations that do different things but you want on one system? 
  • Do you prefer hiring publicly traded companies?

Tier 2 ERP — The Sweet Spot

A Tier 2 ERP is a mid-size ERP system that has some features of Tier 1, but at a lower cost and with some of the hand-holding benefits of Tier 3. There are also Tier 2 ERP systems owned by Tier 1 companies. A lot of the giants in the industry have bought up smaller niche” ERP solutions and continue to support them. Some companies like Plex Systems, have developed their own solution and invest heavily in staying ahead of the technology curve. They focus on smart” manufacturing on the cloud. Another progressive Tier 2 is Global Shop Solutions, the largest privately-held ERP company in the world. Global Shop has progressively grown from focusing on small shops to gaining international customers and competing with Tier 1 vendors.

Is Tier 2 a good fit for you? If you answer yes” to most of the following questions, then you may want to include them in your search.

  • Are you willing to change your processes to conform to the best practices as laid out by the ERP company?
  • Would you prefer to work with the ERP vendor directly for training, customizations and support? (As opposed to a reseller or consulting company.)
  • Are you looking for many of the benefits of Tier 1, but at a lower cost?

Teir 3 ERP — A Modern Option

Tier 3 ERP companies provide the most niche” solutions and usually the most personal support. These smaller companies offer modern ERP, which is often developed around the needs of a specific type of manufacturer. If you are a medical device manufacturer, you may want to consider Expandable ERP. You’ll gain the benefits of someone who understand the type of products you make instead of trying to design a system with a Tier 1 that can do anything but may require a great amount of customization. There are many other Tier 3 ERP solutions. Some vendors, like Aptean, have acquired a number of these Tier 3 products and can likely provide one closest to your needs from an extensive list of specialty ERP. Merger and acquisition is a major factor influencing users of these Tier 3 systems. It is an important consideration, as one vendor may acquire another’s product line because of its unique offering. Information on dozens of other niche ERP products is available by searching Top 10’s database of ERP software by industry or ERP software by manufacturing mode.

Whether you choose Tier 1, 2, or 3, may also depend on the pricing. Tier 3 systems seem to be most competitively priced, especially for the small to the mid-sized manufacturer who is perhaps purchasing their first ERP System. To get the most accurate pricing for manufacturing and distribution ERP software solutions, businesses can use Top 10 ERP’s Best Pricing tool. It’s easy to request quotes for multiple software products at once instead of having to contact each vendor separately. By gathering the relevant pricing data on multiple ERP solutions and comparing them, manufacturing and distribution businesses can make smarter ERP software choices that will provide the most ROI and long-term value.

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