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The Need for a Proactive Two-Tier ERP Strategy: Making “Plan B” Square One

2/4/2013

Over the past few years, business has gained a greater understanding of the overall costs associated with implementing ERP systems. In many cases, this has come as a result of trial by fire – (with the ERP system consuming every resource in its path and some folks getting burned in the process).

To address this problem, a number of organizations have moved to a Two-Tier ERP model – initially as a reactive strategy or “Plan B” as it were, to solve the problems resulting from the “Plan A” Tier-1 ERP deployment.

Two-Tier ERP can be characterized by the existence of a large-footprint centralized ERP package, surrounded by a single, perhaps lighter weight solution that is more cost effective, simpler and more flexible, and better suited to specific operating company requirements.

There are many reasons why to date a Two-Tier ERP strategy has been relegated to “Plan B.” In the past, many companies operated under the assumption that as they grow and “get big,” they will need a Tier-1 ERP system. However history suggests that even in the largest of companies, this has been a pipe dream.

Additionally, a key concern surrounding the use of two separate ERP solutions was the cost and complexity of integration of the Tier-1 system alongside another ERP solution. Today, thanks to the maturity and advancement of middleware, such as business process management (BPM), master data management (MDM) and most recently, virtualization, a significant amount of cost and complexity have been taken out of the equation.

Outside of the technology implications, the move toward Two-Tier ERP scenarios to more effectively deliver country specific localization or meet the unique business requirements of a specific subsidiary or division level, is also playing a role in helping organizations be more strategic from a human capital perspective.

This is key to the concept of the virtual enterprise in today’s knowledge economy – enabling companies via the right business infrastructure to easily take stock of what is happening where and when – to achieve the most advantageous distribution of work via optimum business agility and resource utilization. 

For these and many other reasons, it’s now becoming more in vogue to employ a Two-Tier ERP strategy proactively, from Square One, as a way to cost-effectively and rapidly implement a standardized ERP solution that meets the needs and requirements of business on a global basis.

In fact, I believe we are currently on the verge of an inflection point, where the proactive Two-Tier ERP era is emerging. Case in point: Recent Software Insider data surveys of next gen IT leaders in Q3 2009 and Q1 2010 show a 10% increase among organizations considering a Two-Tier ERP application strategy.

Posted by James Norwood, Senior Vice President, Product Marketing, Epicor

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