What You Need To Know About the Two-Tier ERP Strategy

two-tier erp strategy

All ERP solutions are not created equal – or designed for every manufacturing, production or corporate enterprise.

The three tiers of Enterprise Resource Planning (ERP) are distinct: ERP Tier 1, ERP Tier 2, and ERP Tier 3 .

For some enterprises, ERP Tier 1 may be too comprehensive and robust, far more technology than required to maintain operational performance. ERP Tier 1 is ideal for global enterprises that have annual revenues in the billions of dollars. Think, Fortune 500.

Still, smaller businesses are increasingly seeing the value in incorporating ERP software. And overall enterprises in the market for ERP solutions are increasingly considering a Two-Tier ERP strategy.

Why the Two-Tier ERP Strategy?

In a two-tier ERP deployment strategy, enterprises keep their existing ERP Tier 1 systems at the corporate level, while allowing divisions, business units and designated departments to select a second ERP system.

An enterprise’s ERP Tier 1, or legacy ERP system, acts as a corporate ERP platform, an enterprise’s global standard for running processes that must be standardized across all divisions. That includes things like financials, human resources, and procurement.

In a secondary position, an enterprise’s ERP Tier 2 system supports the distinct and specific requirements of subsidiaries, usually for smaller operational requirements including sales, marketing, field services, or local manufacturing.

Tier 1 solutions require great investment and implementation commitment, but deliver sophisticated operational management, tracking and control for competitive enterprises.

Tier 2 is the domain of mid-sized manufacturing enterprises and corporate entities. ERP Tier 2, which includes solutions by ERP technology providers such as Sage and Epicor, is designed for growing businesses that may have a few localized sites and fewer than 100 concurrent users.

Tier 2 solutions tend to be highly flexible and scale-able, making them easier to implement and less expensive to maintain. This is a great benefit for the mid-sized business looking to deploy better operational and administrative controls at affordable rates.

Today, as more mid-sized businesses seek out the benefits of ERP Tier 2 implementations, many larger companies are exploring the effectiveness of incorporating ERP Tier 2 into their existing ERP Tier 1 strategies to deliver a comprehensive dual-tier functionality ideal for localized performance and global requirements.

Two-Tier ERP Benefits

When it comes to evaluating the benefits of a two-tier ERP strategy, there are several worth mentioning.

Some benefits can include achieving faster time-to-market while reducing cost or tighter project schedules driven by reduced budgets, coupled with more aggressive launch schedules stand out.

Many types of organizations can benefit from a two-tier ERP strategy. Companies with subsidiaries in different lines of business or subsidiaries in different industries entirely are ideal candidates for a two-tier ERP strategy. Enterprises acquiring businesses to support strategic, inorganic growth initiatives would also be well suited for the two-tier ERP system.

Additionally, enterprises that want to modernize their existing ERP solution may wish to retain some elements of their legacy ERP platform, while implementing upgrades in key or emerging areas.

Organizations that adopt a two-tier ERP strategy stand to gain a number of benefits: comprehensive functionality, easily configurable performance, meeting global requirements, reduced costs, improved innovation, greater agility, and better operational control.

A two-tiered ERP infrastructure can be deployed quickly and cost effectively, allowing an enterprise with existing ERP Tier 1 functionality to take more control of its operational performance with easily configurable ERP Tier 2 solutions.

Is a dual ERP strategy the best of both worlds for larger enterprises? When it comes to technological efficiency across local and global performance requirements, it just might be.

Meeting Photo via Shutterstock


Angela Nadeau Angela Nadeau is CEO of CompuData, an award-winning business technologies leader. Angela maintains a deep knowledge of the trends driving businesses today to be more productive and profitable by leveraging technology. With more than 25 years of expertise, she has advised thousands of businesses on effective ways to leverage technology to increase productivity, profitability and efficiency – guiding businesses of all sizes to new levels of market success and corporate growth.

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