ERP News

Using a Two-tier ERP to Modernize Your Legacy Systems

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Many companies are moving to cloud-based enterprise resource planning solutions, with Gartner predicting 30 percent of businesses will move all or part of their systems into this configuration by 2016. Legacy ERPs are often in use for a decade or longer, and making a move can be highly disruptive to business operations. ERP implementations also run the risk of failure, with Panorama Consulting reporting 21 percent of businesses ended up with failed deployments. These failures cause many issues for the companies, and even enterprises that successfully roll out an ERP are not necessarily satisfied with their new systems. A two-tier ERP system can address many of these issues while helping your company modernize its back-office infrastructure.
What Is a Two-tier ERP?
A two-tier, or dual, ERP system utilizes two separate solutions running within the same organization. The legacy ERP operates as normal, providing organization-wide back office functionality. This system is used as the standard across all locations, as it has already been in place. The legacy ERP is considered a tier one system. The tier two systems are new ERPs isolated to specific buildings, departments, teams or another smaller organizational group. Typically, the tier two system focuses on specific vertical needs, functionalities or other specializations.
The Benefits of Two-tier ERP Systems
A two-tier system creates a more complex tech infrastructure within your enterprise, but it comes with many benefits. Your biggest benefit is avoiding widespread business disruption due to a deployment. If the marketing department wants a tier two ERP catering to their needs, they still have access to the legacy system while their new system goes through deployment. Productivity damage is isolated to a single department, so even if the ERP fails, you deal with minimal problems compared to a company-wide rollout.
Your legacy ERP may handle its core functionality fine, with a stable and proven foundation. Instead of putting that at risk with an untested system, you can bring in modern ERP features through controlled deployments. While you may end up completely phasing out your legacy ERP system over time, you don’t have to take on all the risk at the same time.
The deployment process also tends to be more streamlined since you have less moving parts to worry about. You expand your operational functionality, bring in key features to the performance areas that need it the most and get a way to test drive various ERP solutions within your organization in real-world scenarios.
Cost benefits from tier two ERP systems, particularly cloud-based options, are also substantial. Since these systems are designed to serve a limited subset of your company and typically have specialized features based on a specific industry, process or department, you keep your implementation costs down.
Companies Benefiting the Most from Two-tier ERP Systems
Typically, larger and well-established companies benefit the most from two-tier ERP configurations, since they already have an ERP solution in place that the entire company uses for critical business operations. They don’t need something to replace those functions; they simply need to add some modern ERP features into the mix.
A two-tier ERP solution can be the best of both worlds compared to other options. You avoid problems associated with large-scale ERP deployment while still getting the features you need from modern systems. Over time, you can transition entirely to a modern ERP without the frustration level common of a typical deployment.

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