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

Learn how a two-tier ERP system can enable enterprise manufacturers to manage individual business units, helping increase flexibility, scalability, and value.

November 14, 2023

For years, manufacturing companies have been turning to ERP systems to stitch their organizations together with one master piece of software that acted as a single source of truth. This centralized solution has worked well for organizations for a time. But with today’s rapidly evolving technology and growing business needs, a one-tiered ERP system is actually becoming more of a hindrance.

Today, many organizations—especially those with multiple business units—are seeing the value in moving away from a one-tiered ERP approach to a two-tiered approach. With one ERP system managing the core of the business, and another managing individual business units, organizations can gain more flexibility, scalability, and value.

Here are five signs you’ve outgrown a one-tiered ERP system.

1. A one-tiered ERP approach lacks flexibility and agility

Having one ERP system that you can roll out across your entire organization may seem like a good approach at first. However, a one-tier ERP system is essentially forcing a one-size-fits-all solution across varied business units and needs. This can limit or reduce the flexibility and agility across your organization, and especially limit the growth and development of individual business units.

Instead, a two-tiered ERP approach allows both tiers to function in the best way they can, not restricted to fitting into a single solution, increasing flexibility and agility across your organization.

2. A one-tiered ERP approach results in increased costs

A one-size-fits-all solution can also increase costs as you try to fit the system to the unique needs of each business unit. Not only are there increased costs during implementation, but standardized upgrades across an organization can be costly as well if you’re trying to align across different organizational needs, ballooning IT costs for resources and people.

Instead, a two-tiered ERP approach reduces costs in implementation and upgrade because you’re fitting one system to one business unit, not trying to fit many business units into one system.


3. A one-tiered ERP approach actually creates complexity

The idea for decades had been to reduce complexity by bringing all parts of a business’s operations under one ERP system. But because of today's demands, the varied ways business units work, and the needs of a merger or acquisition, bringing all of those units under one ERP system can add complexity in trying to align systems, data consolidation, reporting, compliance, and other business facets.

Instead, a two-tiered ERP approach reduces complexity by catering to the needs of each business unit, and then connecting to the cross-organizational ERP where it makes sense.

4. A one-tiered ERP approach impacts smaller business units

You may have business units that function independently, go at a faster pace than others, or that have different regional needs. However, they’re going to be impacted if they have to slow down or align to different business needs. A one-tired ERP system may be suited for managing the operations of a business that has few or no lines of business, but for those that do, staying with a one-tiered approach means those units may not get the resources they need, or be left out completely.

Instead, a two-tiered ERP approach empowers business units to stay at their pace of innovation, and to leverage compliance or processes that work best for them.

5. A one-tiered ERP approach hinders business growth

If a one-tired ERP can create complexity and hinder flexibility, it can clearly hinder business growth as well. It can hold your business back as you try to align all the parts together, and using a one-size-fits-all system will take longer to realize value, if it does at all.

Instead, a two-tiered ERP approach improves flexibility, reduces costs and complexity, and frees up your organization to be able to grow and scale into the future.

Looking to the Future of Innovation, Growth, and Operational Excellence

The era of having a one-tiered approach to your ERP strategy is fading. As modern manufacturing organizations look to the future of global business innovation, they’re looking to a two-tiered approach to their cloud-based ERP strategy to position them for future growth opportunities and seeing immediate value on new initiatives.