Two-tier ERP refers to the practice where two ERPs that are run at once. The larger system known as tier-1 is deployed at the corporate level and the other one at the subsidiary level. The Two-tier ERP system is usually implemented when it becomes very costly to customize, upgrade and maintain the Tier-1 system, legacy; or when acquisitions and mergers leave an organization with multiple ERP solutions that consolidating to a single ERP system is not possible.
ERP Tier 1
This is also known as legacy ERP system and acts as the corporate ERP platform (this refers to a global standard for running processes that requires standardization across all divisions -human resources, financials and procurement).
ERP Tier 2
This system supports the specific and distinct subsidiary requirements. This is usually for operational requirement. This is an effective strategy, particularly designed for enterprises that are acquiring business for their strategic support.
Reasons why organizations use Two-tier ERP
The following are common concerns in organizations that use the Two-tier of ERP
– A small subsidiary having no previously established formal ERP in place
– An operation newly acquired with unsupported ERP and multiple outdated mismatched ERP.
– A business with set local focus – within a single region or country – single site or multiple site.
– A second tier small operation which does not warrant using the enterprise ERP software, nevertheless may be introduced as the operations grow, into the corporate fold.
– A business having operations that are strongly geared towards a specific industry and this industry does not strongly feature at corporate headquarters.
One of the achievement that one gets with using a two-tier ERP strategy is a comprehensive functionality, improved innovation, easily configurable, better operation and greater agility.
In other words, this enables your organization to regionally optimized back office processes; this is especially at a site operating under a business model separate from the company.
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