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

Understanding which Tier of ERP is the most appropriate for your organization can be helpful in several ways. It can help you save time by allowing you to focus your research efforts on solutions that are a good fit for your needs. It can also help you avoid choosing an ERP system type that is too complex or not robust enough to meet your business requirements.

By taking the time to understand the different Tiers of ERP software solutions and which one is the best match for your organization, you’ll be better equipped to make an informed decision when selecting the right solution for your business.

Let’s dive in and look at some ERP system examples in the different tiers. You’ll recognize some of the systems from our list of top manufacturing ERP systems in these tiers as well.

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 and custom programming resources to put very diverse company locations on one system. Examples of common ERP systems in Tier 1 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 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 a 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 have multiple locations that do different things but you want one system?
• Do you prefer hiring publicly traded companies?

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.

Are the types of ERP systems in 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 laid out by the ERP providers?
• 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?

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 ERP software providers, 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 ERPs. Mergers 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 Top10ERP’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 the most competitively priced, especially for the small to mid-sized manufacturer who is perhaps purchasing their first ERP System. To get the most accurate pricing for the manufacturing and distribution ERP software solutions, businesses can use Top 10 ERP’s Best Pricing tool to get a list of ERP applications that meet specific requirements. 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.