Does this sound familiar? As your business expands, the multitude of software programs in use becomes unwieldy and disorderly to handle. Frequent errors, data duplication, and internal miscommunication become common issues that different types of ERP systems can solve. Alternatively, your business may be at a standstill, and you’re thinking of changing things up to give it a boost. Every company is adopting change. Businesses are streamlining their operations, reducing manual efforts, and overhauling legacy systems and practices to establish more efficient workflows and enhance profitability. This transformation is proving successful, as evidenced by the thriving enterprise resource planning (ERP) market, which is expected to reach $62.3 billion by 2028, and the hundreds of ERP solutions of different types on the market. But how do you choose among different types of ERP systems to ensure scalability and efficiency of your operations?
To make informed decisions, it is essential to explore your options. We’ve curated a guide outlining various ERP system types and their functionalities. This guide will help you select the right system that matches the needs of your business.
Types of ERP Systems
ERP systems can be categorized based on several characteristics:
- Custom-built, ready-made, or hybrid solutions
- Cloud-based, hybrid, or on-premise
- General or industry-specific
- Designed for specific-sized companies
With around 250 distinct ERP software solutions on the market, navigating through the options to find the most suitable one for your company’s needs can be a time-consuming task. Here is a more detailed description of your choices when selecting different ERP software types.
Custom-built, off-the-shelf, or hybrid
Custom-built ERP software is developed by your selected ERP development company to meet your requirements and align with your business processes precisely. To discover the ideal ERP development company, you will have to research the available options, contact potential partners, evaluate their previous experience, get some client testimonials, and make the decision. A reliable partner will have experience working with different types of ERP and consult you on the options that would suit your business case.
Off-the-shelf ERP is a pre-built software package. Prominent off-the-shelf ERP software products include Microsoft Dynamics, SAP Business One, and Oracle EBS. These solutions come in a package and often include paid features your business might not even need. Sometimes, they lack the specific features that are essential for some unique business cases. Overall, these solutions serve their purpose well, but they come with considerable annual expenses and require fine-tuning.
A hybrid model is a viable option when you already have an existing ERP solution but desire to develop new modules or integrate custom features. This approach allows you to customize the existing solution to your specs quickly.
General ERP systems or industry-specific ERP systems
General ERP systems are not specifically designed for a single industry or purpose; instead, they are configured for broad applications. They serve as an excellent starting point for both niche businesses and those comfortable with a more generalized approach.
Industry-specific ERP platforms, also referred to as vertical ERPs, are typically smaller, and potentially more costly, but finely tuned for a particular niche industry, such as retail or construction. These systems are either crafted from scratch as custom solutions for specific businesses or designed with a focus on a specific industry. In many cases, these are custom-built solutions for a specific company. Alternatively, these can be off-the-shelf but more specialized systems with features specifically valued in a particular industry.
ERP Systems for specific-sized companies
Given that small businesses operate on a different scale with distinct needs compared to multinational corporations, ERP systems tailored for small businesses tend to be more cost-effective and efficient for smaller-scale organizations. These ERP systems often include fewer features, eliminating modules that are typically unnecessary for smaller companies, thereby making them more budget-friendly. While these systems support only a limited number of users and a smaller volume of data, opting for a lightweight system can save your business money and enhance operational efficiency. On the flip side, there are special types of ERP tailored to the needs of large corporations. They have a much broader functionality that suits a wider range of businesses. At the same time, they are more expensive.
Cloud-based, hybrid, and on-premise
There are three primary options for deploying different types of ERP systems: cloud, hybrid, and on-premises. Each option comes with distinct benefits and considerations. Let’s delve into them further.
Cloud-based ERP solutions, especially favored by small and medium-sized businesses, involve software and data management by a third-party vendor. This approach diminishes the need for extensive IT infrastructure and dedicated servers within the organization. Cloud ERP presents several advantages:
- Low maintenance: Complex IT infrastructures become unnecessary with Cloud ERP, as the vendor takes charge of software updates, security, backups, and server maintenance, thus reducing the IT workload.
- Scalability: Cloud ERP permits businesses to scale their systems as needs expand effortlessly, adjusting user numbers, storage capacity, and functionality without substantial upfront investments.
- Accessibility: Remote access is facilitated by Cloud-based ERPs, promoting collaboration and productivity from any location with an internet connection.
Hybrid ERP integrates components from both cloud-based and on-premises ERP systems, tailoring to businesses with specific functionality needs or regulatory requirements. Key benefits encompass:
- Data security: Industries such as healthcare and finance, which have strict data security regulations, can utilize Hybrid ERP to store sensitive data on-premises while leveraging the cloud for less sensitive operations.
- Customization and integration: Hybrid ERP provides flexibility in integrating on-premises systems with cloud-based applications, facilitating customization and seamless integration with legacy systems.
- Cost optimization: Hybrid ERP optimizes costs by employing cloud services for non-critical operations while maintaining on-premises systems for core functions.
On-premises ERP means the traditional deployment approach where both the software and infrastructure are implemented and overseen within the organization’s premises. While this option affords control and customization, it requires a robust IT infrastructure and a proficient IT staff. Advantages of on-premises ERP encompass:
- Control and customization: On-premises ERP provides comprehensive control over software, data, and infrastructure, allowing for extensive customization.
- Data control and compliance: Organizations opting for on-premises ERP maintain direct control over sensitive data, ensuring compliance with regulations and security standards.
- IT expertise: Implementing and managing an on-premises ERP system demands a skilled IT team capable of handling infrastructure setup, maintenance, updates, and security.
All ERP system types prove to be a potent asset for organizations across diverse sizes and industries, providing a centralized platform for overseeing various operations, facilitating data flow, and enhancing overall efficiency.
Given the array of available ERP systems, decision-makers must familiarize themselves with the diverse types of ERP software, features, and deployment options to make well-informed choices.
Thoroughly considering critical factors such as cost, scalability needs, and user experience enables organizations to choose the appropriate types of ERP systems that align with their distinct requirements and yield a positive return on investment. As technology undergoes continual advancements, the future of ERP systems holds the promise of further innovation and exciting developments, empowering businesses to streamline operations and achieve even greater success.