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Two tier ERP ? Rewarding enterprises with substantial savings upto 33%

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by Mahesh Babu , Senior Research Analyst
31 March 2014

Introduction: Large enterprises are increasingly considering the adoption of ?Two tier ERP? model as their ERP strategy model. A Two-tier ERP approach provides most of the benefits of a single tier ERP but at the same time reduces some the major disadvantages suffered by the single-tier model. Main: A single tier ERP model was believed to be the most cost effective and the most reliable and many organizations preferred to have a single-tier ERP model for them. Despite of all these beliefs and preferences, there are quite a number of factors that challenge this stance. Studies indicate that Single-tier is not as cost effective as they claim to be and organizations can lower their costs by adopting a Two-tier ERP. A Two-tier ERP model can be defined as a model in which an organization uses different ERP systems at two different layers of the organization. Recommendation: A large enterprise which has many operational units across the globe and has a cross business and cross functional teams can be benefited largely by adopting a Two-tier ERP model. A two tier ERP model is more practically feasible approach than a single-tier ERP model for an organization that wants optimally fit ERP solutions for its regional subsidiaries with a significantly lesser investment. Problem Statement / Introduction A single tier ERP system suffers from various disadvantages when it comes to large enterprises with a mix of small or large autonomous divisions. One of the major disadvantages suffered by single tier ERP system includes slowing down of the innovation process and reduction in agility to the dynamic market situations and unpredictable business environments. A Two-tier ERP model is gaining popularity as an effective solution to the above problem.

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