Tier Type ERP System Vendor
The ERP vendors are divided into three types: Tier 1, Tier 2 and Tier 3. The Type of ERP vendor is determined according to his ability to provide economical and business needs.
These needs are normally derived from the size of the organization and its business requirements. There are the large enterprises who are conducting business internationally; there are the mid-market businesses and there are the small local businesses. And today’s ERP market offers three types of vendors for these three types of business sizes.
ERP Software Vendors Tier I
ERP vendor from type tier 1 Provides ERP system and business software solutions for large enterprises. This Tier is dominated by SAP, Oracle and Microsoft Dynamics NAV. This kind of ERP software offers a large variety of process options. It is very flexible and it is designed to address (almost) all possible requirements and business needs. And it is accordingly expensive. Another aspect is the complexity of the software and the required hardware.
Thus ERP tier 1 system requires a team of IT specialist that can support it –what a large multinational organization can afford. But I will tell you that; 60% of organizations that purchase this kind of ERP system use only about 60% of the systems capabilities. In other words many of the objects and functionalities will not be reviewed, authorized, implemented or used. But there is one significant advantage – global presence.
The tier 1 ERP system can offer support and services anywhere in the world because they have customers all over the world and maintain an appropriate support and service infrastructures. If you use a tier I system and had enough from your consultant it will be easier for you to find another.
ERP System Vendors Tier II
Vendors from type tier 2 provide ERP systems for mid market businesses. The tier 2 ERP software will offer products and services designed specifically for these kinds of organizations.
Tier 2 Vendors are considered suppliers to tier 1 companies. For example, a subcontractor in the automobile industry that delivers the spare parts for big ones could use tier II software. What portrays this ERP software is the middle complexity of its applications. It means that the software may answer specific business needs with fewer resources than tier 1 ERP software.
Tier 2 vendors offer usually vertical solutions – solutions that address one area of industry: automobile industry, med-tech industry, insurance or banking. The tier 2 ERP systems have lower costs of ownerships and that means lower annual license fees, lower costs of implementation and services and lower costs of support.
ERP Software Vendors Tier III
ERP tier 3 vendors provide ERP systems for small businesses. They are usually local situated and operate within one country or region. What mostly characterizes them is the tendency to serve small local businesses with up to 20 users.
Tier 3 vendors are mostly private organizations, which allow frequent and faster software development and modifications.
Another advantage for the users is the closer interaction with the vendor and the software development team. And when specific business needs arise it is much easier to communicate them to the vendor.
New Reality – Cloud Computing ERP System
But that market is changing folks; today tier 3 vendors can operate their offices in London England and have customers in Massachusetts USA. And all thanks to the cloud. In other words the simplicity of the system allows them to adjust better to the cloud technology and environment.
Toady SaaS and cloud ERP solutions have the highest rates of growth in the market. So where do you find yourself? Which type of System will suit your business environment and needs? Take a look at the next resource.
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