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  • 5 Questions to Help You Decide if You Need a Tiered ERP Solution

5 Questions to Help You Decide if You Need a Tiered ERP Solution

February 07, 2024

Manufacturing businesses seeking to organize operations into one centralized hub often use a single-tier ERP solution to streamline the process.  This "traditional" approach to ERP strategy works well for organizations that need a one-size-fits-all, consolidated solution. However, as your business grows and scales, you may view single-tier ERP solutions as more of a constraint than an advantage. Instead, taking a two-tier approach to your ERP strategy may be a better option to support individual business units: get the advantages of having one tier working at the corporate level while another functions at the business unit level in configurable ways that meet your unique needs.

Still not sure which one is best for your organization? Here are some questions to consider when choosing an ERP strategy, based on common reasons that Gartner has found for adopting a tiered ERP approach:

Does a business unit need an ERP immediately?

Sometimes an urgent or specific requirement for a business unit arises that prompts an evaluation of a  second-tier ERP solution. Circumstances that may necessitate this include unexpected growth patterns, localized needs around compliance or resources, or the demands of a recent acquisition.

Does the business unit have different needs from the corporate ERP model?

A single-tier ERP solution does create a comprehensive way to track and manage your operations. However, the one-size-fits-all structure can also constrain individual business units with specific requirements based on pace of innovation, localization needs, and other differentiating factors. If this sounds like your business, a two-tier approach is a great way to empower your organization with the flexibility and autonomy of a configurable ERP system.

Are you trying to better consolidate your organization?

Two-tier solutions aren’t always the answer. If centralization is important to your business strategy, then refining and maturing your single-tier ERP so that your business units come under a one-size-fits-all solution may be the right choice.

Do you see this shift in your ERP structure as an interim or long-term strategy?

Are you committed to a big-picture, two-tier strategy, or do you view it mainly as a useful  interim solution until you can fully build out your centralized ERP?  Taking a two-tiered approach means faster implementation and quicker time to value across business units, which can jump start your operational management. In addition, once business units have functioned under their own ERP solution, they may be reluctant to give it up to join (or return to) the one-size-fits-all approach.

Do you need to prepare for this business unit's future independence?

If your goal is not overall consolidation and centralization, but rather to prepare a business unit for eventual independence, having them function under their own ERP tier can help establish that self-sufficiency faster. Then, once they’re ready, splitting off won’t require trying to decouple them from the one-tier ERP—they’ll already be thriving in their own tier.

The Best ERP Solution is One That Works for You

Whether a single-tier or two-tier solution will help drive  business growth depends on your specific needs and goals. Taking time to evaluate your short- and long-term business strategies will help inform your decision on the ERP solution that can best position you to expand, scale, and thrive in the months ahead.

 

Learn more.

These 7 Factors are Driving Demand for a Two-Tier ERP Strategy | Epicor

5 Signs You’ve Outgrown a One-Tier ERP System | Epicor