Organisations are constantly seeking ways to improve efficiency, agility, and responsiveness.

One increasingly popular approach is the two-tier ERP strategy.

But what exactly is it, and how can it benefit your organisation?

Understanding Two-Tier ERP

A two-tier ERP strategy involves using two different ERP systems within the same organisation.

The first, a tier-one system, typically handles core corporate functions such as finance, accounting, and human resources. This system is often a comprehensive solution from a major vendor like Infor SunSystems or Oracle NetSuite.

The second, tier-two system, caters to the specific needs of individual departments, subsidiaries, or business units. These systems are often more affordable and adaptable than tier-one solutions, allowing for greater customisation and flexibility.

For example, a manufacturing plant has vastly different needs and priorities compared to a corporate office. Forcing a single compromise solution often leaves one side sacrificing functionality and IT managers grappling with patching disconnected solutions.

A better approach is to deploy a two-tier system, an integrated network of two ERP solutions that share data, maintain visibility, and provide users with the best of both worlds.

Instead of binding the entire organisation to a single, limited system, divisions can implement vertical-specific solutions tailored to their needs while remaining connected to the parent solution.

Benefits of a Two-Tier Approach

There are numerous advantages to adopting a two-tier ERP strategy:

1. Enhanced Flexibility

One of the most significant advantages of a two-tier ERP strategy is flexibility.

Traditional ERP systems often impose a ‘one-size-fits-all’ solution, which may not always be feasible for all departments or subsidiaries. With a two-tier strategy, your different teams can leverage the Tier 2 system to address their specific needs, while still aligning with the organisation’s standard operating procedures and reporting requirements.

2. Cost-Effective

Implementing a single ERP system across all levels of an organisation can be costly, especially for larger organisations with numerous subsidiaries.

A two-tier ERP strategy can be a cost-effective alternative as it allows you to deploy high-cost Tier 1 ERP solutions at the corporate level and more affordable, flexible Tier 2 solutions at the subsidiary level.

3. Improved Efficiency

A two-tier ERP strategy can significantly improve efficiency throughout your organisation.

Using  finance as an example, by integrating both corporate and subsidiary systems, the finance department can gain a holistic view of the organisation’s financial health. This enables quicker decision-making, streamlined financial reporting, and improved forecasting accuracy.

4. Greater Autonomy

With a two-tier ERP system, subsidiaries gain greater autonomy. They can customise their ERP system to suit their specific requirements, while still adhering to the overall corporate standards.

This is particularly beneficial for teams within these subsidiaries, as they can tailor their ERP system to align with their unique processes and workflows.

Is Two-Tier ERP Right for You?

While a two-tier approach offers numerous benefits, it’s not a one-size-fits-all solution. It’s important to carefully consider whether this strategy is right for your organisation.

Some factors to consider include:

• The size and complexity of your organisation: Two-tier ERP is typically more suited to larger organisations with diverse business units and operations.
• Your budget and resources: Implementing and managing two separate ERP systems requires additional investment and resources.

Making the Most of Two-Tier ERP

If you decide to adopt a two-tier ERP strategy, there are some key steps you can take to ensure its success:

• Clearly define your business needs and objectives. What are you hoping to achieve with a two-tier approach?
• Carefully select your tier-one and tier-two systems. Ensure they are compatible and can integrate seamlessly.
• Develop a robust data integration strategy. This is essential for maintaining data consistency and visibility across both tiers.
• Provide adequate training and support for users. Ensure everyone understands how to use both systems effectively.
• Continuously monitor and evaluate your two-tier strategy. Make adjustments as needed to ensure it continues to meet your evolving business requirements.

Conclusion

A two-tier ERP strategy can be a powerful tool for organisations looking to improve efficiency, agility, and responsiveness.

By carefully considering your needs and objectives, and taking the necessary steps to implement and manage it effectively, you can unlock the full potential of this approach and drive lasting success for your organisation.

This is why we built UniFi – to seamlessly integrate with your existing ERP system, plug any gaps within it, and empower each department in your organisation to build custom apps to fulfil any workflow or process, regardless of their individual requirements.