Pop Quiz, Hot Shot: Is a 2-tier ERP strategy right for your organization?
Yes, considering a two-tier ERP strategy is a little different than Dennis Hopper and Keanu Reeves taking us through the Hollywood-fabricated intensity regarding a bomb on a bus. However, we do have a brief quiz to help you decide if a two-tier ERP strategy would be helpful for your business. Here you go:
- Is your business a manufacturer, distributor, private equity firm, or holding company?
- Is your business a multi-national company or one with multiple business units?
- Does your company currently use homegrown, Oracle, or SAP enterprise software systems?
- Will consolidating your operations onto one enterprise software system result in the degradation of business processes?
If you answered “yes” to all the above, it’s time to seriously consider a two-tier ERP strategy.
What is a two-tier ERP strategy?
A two-tier ERP strategy is an agile approach to business modernisation that allows an organisation to iteratively replace legacy software without disrupting core ERP business operations. With a two-tier ERP strategy, businesses don’t need to view their headquarters and other sites as a collective whole. Instead, they can consider the needs of each location, along with the organizational operational requirements, to choose the best systems capable of easily working together to meet their diverse needs.
This approach provides businesses the necessary ERP elements needed in both headquarters and at the various sites, without requiring the implementation of unneeded functionality in either place. With a two-tier ERP strategy, the individual sites can focus on the operational business systems needed to run that location—like local manufacturing or field service needs—while headquarters can focus on the financial management and other necessary systems needed to run the organisation overall.
Why should you be thinking about a two-tier ERP strategy now?
If your answers to the brief quiz above aren’t incentive enough to start thinking about a two-tier ERP strategy, let’s take a closer look at what a two-tier ERP strategy can bring to your business with a “Top 3 Reasons Why You Need a Two-Tier ERP Strategy” list.
- Your organization is already considering a cloud-based computing strategy. Many companies are now in the research and consideration phase of moving away from an on-premises computing environment to a cloud-based infrastructure, for various reasons—among them being reduced costs, better security, and faster integration or deployment of acquired or expanded operations. Cloud computing is fast becoming the new standard for IT infrastructure, and organizations are keen to take advantage of all the benefits it will bring.
- 2. You’re finding it difficult to codify or automate the business processes that power competitive differentiation. The ERP software industry has a long-standing, negative reputation for making companies adjust their business processes to how the software works rather than providing software that adjusts to the business processes and workflows the businesses have honed and consider the “secret sauce” of their business strategy.
With a two-tier ERP strategy, businesses can maintain the ERP systems and business processes that remain constant—like general ledger, financial reporting, and other staid workflows. If it ain’t broke, don’t fix it.
However, this strategy also gives companies the flexibility you need to accommodate new, unique, or revised business processes in other areas, like product development, customer engagement, services enablement, and more. This flexibility comes from an extensible, industry-focused, cloud-based ERP software system—which can be deployed without resulting in business process degradation or value loss.
- 3. You don’t have an easy way to get a comprehensive view of what is happening across all parts of the organisation. Show of hands: who here loves all the data, tables, spreadsheets, and weeks it can take to get information, analyse it, and then use it to make decisions? Decisions that could have saved your organisation thousands of dollars if you only had the information and analysis available real-time?
While some people may be really into spreadsheets, no one is into losing thousands of dollars. This is an area where a two-tier ERP strategy really shines.
With an industry-specific ERP system automating production-level workflows, parts are sourced, inventory is managed, and products are efficiently made and shipped. At the same time, money sent, money received, parts in stock, and other relevant information is collected and transmitted in real-time to the core reporting engines at corporate headquarters.
At headquarters, the ERP system there can aggregate all the data coming in and analyze it, displaying key performance indicators on dashboards built specifically for each executive or individual who is tasked with tracking various metrics. (Side note: if your core ERP system can’t accommodate this level of data aggregation and analysis, check out how Miller Industries, the world’s largest manufacturer of towing and recovery equipment, uses Birst Analytics to get this level of information).
What do you need to execute a two-tier ERP strategy?
There are two key things needed to make a two-tier ERP strategy work: First, the distinct industry needs of the plant need to be built into the ERP system. Secondly, the ERP system should be cloud-based, with the ability to integrate with other ERP systems and industry-specific applications, in addition to providing the flexibility needed to be quickly and easily implemented virtually anywhere, at any time.
For a thorough discussion on what you need to be thinking about when it comes to a two-tier ERP strategy, check out “Use the Cloud to Optimize Your ERP Footprint in a 2-Tier Strategy,” an IndustryWeek webinar recently hosted by Infor and Deloitte.