What are the ERP tiers? Tier 1 vs Tier 2 vs Tier 3 ERP

Undoubtedly, ERP solution is effective for the business. According to the business benefits, ERP comes in different sizes. It comes with the name of ERP tiers and the size goes for three-tier ERP like ERP tier 1, Tier 2, and Tier 3. Most business thinks that the three works according to the Good, Better, and Best. Just take the clear meaning of ERP tiers mentioned below.

ERP Tiers Definition
ERP Tiers & Architecture – Tier 1 vs Tier 2 vs Tier 3

What is ERP tiers definition?

Several mid-size businesses think that the ERP works according to the quality like good, better, and the best. According to the definition, the ERP tiers come according to the client size, client financials, complexity, and scalability including the global support. ERP infrastructure can come to vary depending not only on tier but from system to system. Many businesses think that Tier one provides you bragging rights but the cost comes higher when you own a big house with bigger bills for heating the rooms. Tier two and three come under the process of depending on the good and better. 

What is the Tier 1 ERP?

The ERP Tier 1 comes basically from SAP and Oracle ERP. They come to provide the service in need of fortune 1000 companies. It is for complex and large businesses having many departments and global locations. It is good to know that revenues come measuring in billions. A Tier 1 ERP is designed with complexity according to the process of mind. As an example, ERP Tier 1 allows several people for working on a single function and the software can come to split the task into multiple users. It is very fruitful for billion Dollar Company and the smaller company gets puzzled by the number of steps and common complexity. It is very important to know that Tier one generally consumes a long time for implementation and its price is very high. 

What is 2 Tier ERP architecture?

Tier 2 products work with offers for several vendors. Generally, Epicor ERP, Microsoft, Sage, Infor, and many vertical players come into this group. ERP Tier 2 works well for mid-size companies under single or multiple locations. The level of complexity comes to vary a bit in this section. Under this category, you can find several vertical market players and they may be developers focused on the complexity of the special industry. 

ERP II system comes more horizontal and tends to be financially stable. Often it comes for 3rd party enhancements for missing complexity out of the box. The systems come to be installed and supported by local partners. 

What is the Tier 3 ERP?

Under the lowest cost level, you can get Quickbooks and Sage 50 that do not offer the functionality of Tier 1 and Tier 2. Even these may not even go for a qualifying ERP system. You can get basic accounting abilities from these small business tools. 

Small business or LOB application goes for weak accounting benefit using Tier 3 solution. They can work with low TCO having easy implementation. But there is a risk issue for a growing company as it will quickly make out the solution. It is good to know that most companies under Tier 3 have some sort of data migration capacities. 

ERP tier 1 vs ERP tier 2 vs ERP tier 3

To get a good classification of the system, it is mandatory to use a cocktail of the above definition. Here the categorization by the tier comes for foreseeable future. Just come to the information mentioned below. 

Tier 1 ERP software

Before you come to complete ERP tier1 Vs ERP 2, you should check tier-one very clearly. It is best suited for a complex enterprise. For the larger business having $500 million in sales, tier-one ERPs are undoubtedly helpful. If you have many users in your company, ERP 1 comes good with the requirements. 

It is very common that businesses with tier 2 ERP graduate to tier 1 as they expand the operations to several countries & support multi-national systems and intricate system requirements. 

The tier 1 ERP provides an implementation for 18 months or more. It needs at least $1000,000 project budget. It includes financial supports for cash management, general ledger, accounts payable, inventory, customer relationship management, and many more. 

Surely, you will get everything from the tier-one system out of all ERP tiers. . Truly, 50 percent of the companies come to use one-tier ERP and they come to give more priority to the two-tier system. That means if your business needs tier one, you need to use it and should not go for tier 2.

It should also be noted that up to 50% of the companies that use tier one ERP services can use a highly advanced tier two system instead. So you shouldn’t use revenue as a measuring stick alone to determine if your business needs a tier-one ERP solution. 

Pros: 

  • Can easily manage complex and unique requirements
  • Can do the completion of ERP functionality
  • Come to manage multiple locations globally
  • Most of the users under this system
  • Public companies and multi-national companies under this system

Cons:

  • Commonly requires $1,000,000 for implementation
  • Time for implementation from 18 months or longer

Tier 2 ERP software

Tier two becomes essential for the total ERP system having 20 to 40 percent used companies and most of the companies are small to medium. Under this tier, business comes with a profit from $25 million to $500 million in revenue earning. The companies having this tier are moderate to complex requirements but not many users like tier-one come to use tier 2.

Tier two ERP can offer anything like financial, inventory, and purchasing for ERP functionality in need of supply chain management including manufacturing but they do not come to cover manufacturing and multi-plant scheduling. A business owner under tier 2 needs to be a highly experienced bookkeeper having account access to make sure everything is on track.

Tier two implementations can range from $25,000 to $400,000 and typically take between three to eight months to execute. Implementing changes to the ERP is typically less costly in both budget and time since tier two systems are more flexible than tier one. On the flip side, they are significantly more complex than a tier-three solution.   

The implementations of tier 2 can come to range from $25,000 to $400,000 and take time between three to eight months. The implanting charge for ERP is less costly and is more flexible than tier one. 

Pros:

  • Manages moderation for complex requirements
  • Many systems come comfortable for this ERP
  • Implementation time is three to eight months
  • Easier and cost-effective for customization than tier one
  • Has a good track record for the best implementation.

Cons:

  • Needs an experienced bookkeeper or account
  • Runs with complexity than all three systems

Tier 3 ERP software

Tier three is both the most economical and highly commutable, which lends itself to be the most prone for significant audit and fraud risks. Because some of these ERP systems can be too flexible and allow ledger posts to be changed, these systems are the simplest version of ERP and only require a junior bookkeeper or you, the business owner, to run it. Many of these systems are primarily intended for financials and keeping track of expenses and orders.

Tier 3 system comes with the cost from $250 to $5,000. The thing is that sometimes, it works like QuickBooks. They have different shortcuts with automation that tier 1 and tier 2 have. It is sorry to say that tier 3 is not a complete functional ERP in need of a multiple inventory system. 

Pros:

  • Budget-friendly
  • Implementation within 2 to 6 weeks
  • Technical expert required
  • Low-risk payback
  • Easier to learn than tier 1 & tier 2

Cons:

  • Audit and fraud risk
  • In need of business performance, the different system required

How to select the right ERP for your business. You need to consider several things for the right consideration during the time of ERP selection. It is the proper step to grow your business and you give importance to the right choice. You have to start taking a deep dive into your business and need to outline what your company and customers need including functional requirements, business goat, and others. You need to find the right partner to navigate scaling your business with the ERP.

Conclusion

Business comes to be normal in size, medium or large and according to these, the owners have to take initiative to control the business. Nowadays, the software makes the owners comfortable and efficient to handle the business. Even software like ERP does the work very smoothly and quickly. According to the size of the business, ERP comes accurate with its price that helps the owners of the business interested to purchase the product. The product is categorized into tiers ERP architecture divided into three tier ERP.