Forrester White Paper – Two-tier ERP Strategy

This is an excellent read for companies that are medium to large in size. It looks at the confronting questions of how to equip subsidiaries with integrated business management—without the high costs required for the SAP, Oracle or other ERP systems they run at headquarters.

It’s Time to Clarify Your Global ERP Strategy, for a look at how two-tier “hub-and-spoke” ERP can offer greater speed, efficiency and cost-effectiveness.

I received my copy on the NetSuite site and the link below goes to that landing page. Read it in association with our Compare ERP Guidebook.

In this white paper, Forrester discussed how the main players can fit in with various strategies, covering Oracle, SAP, Microsoft, Netsuite &  Epicor. Below is a diagram explaining the typical single-hub model, paper explains other options and when to use them.

2-tier ERP

NetSuite New 2-Tier Strategy

NetSuite will tie departmental and divisional implementations of NetSuite’s cloud-based OneWorld suite with a core on-site ERP system from the likes of SAP or Oracle. It will utilise a connector from Informatica.

Interest in two-tier ERP is growing significantly, according to a report from Constellation Research. Forty-eight percent of respondents to a recent survey the analyst firm conducted said they were considering such a strategy, up 27 percentage points from a 2009 survey. More details and Graphs.

A single monolithic ERP does not work for many companies. This is often due to Global companies having different businesses in different parts of the world eg some countries may have their own warehouses while others outcource to a 3PL company.

As well as NetSuite, some of the larger vendors are themselves developing 2-tier strategies. SAP for instance has both BusinessOne and Business ByDesign as options for 2-tier markets.

When One ERP System is not enough!

The long held strategy for many companies is for a single-instance enterprise resource planning system (ERP) is on the wane. So says a new report by the analysts at Constellation Research.

You may no longer need one ERP but two! I FEEL YOUR PAIN! Has the world gone crazy?

The general trend was to consolidate disparate ERP systems—often the result of acquisitions or departmental siloing—into one mega ERP deployment to run the entire business. The goal of such “single ERP” efforts was to facilitate streamlined business processes and holistically manage business data at a lower cost of ownership.

Seems that trend is over. Key reasons are:

  • Too many big-system failures
  • Systems that are Inflexible to business changes
  • High maintenance fees and slow release schedules
  • Lack of industry functionality and lack of innovation

So instead of one ERP – you now need TWO – or to be precise a two-tier approach. This “enables organizations to keep existing ERP systems at the corporate level while empowering divisions or business units to innovate with a second ERP system,” R “Ray”Wang at Constellation Research reports.

The Case for Two-Tier ERP Deployments,” shows a shift in thinking – in the third quarter of 2009, just 21% of the companies surveyed by Constellation said they were considering a two-tier ERP strategy. By the first quarter of 2010, that number had grown to 32%. And in the first quarter of this year, 48% of organizations said they were pursuing a two-tier ERP model.

At the top end Oracle and SAP are the main contenders, but the mid-market and business unit ERP market is up for grabs. This brings in new competitors like Netsuite and Microsoft as well as the new products such as SAP Business by Design into the picture. With these systems comes new models in terms of licensing and ‘cloud’ based technologies

The report concludes, “Whether SaaS, on-premises, or hybrid, a two-tier ERP strategy will reduce costs, meet new business requirements, and provide better business value.”

See chart below for more detail. If a 2_tier strategy is an option for your business, note it in your requirements checklist. Use the one we developed to save you time and research efforts.



SAP Business One Overview Video

A video looking at the key features of SAP Business One – version 8.8. Looks at enhancements, reporting and processesetc. Runs for about 40 mins. If this is a potential product for you to consider – add it to the ERP Checklist that can be downloaded.


2-tier ERP

Here is an interesting web post looking at 2-tier ERP. It identifies 2-tier ERP as a trend as single instances are not as important as they were due to

…… forces, a move to adopt new disruptive technologies, slow pace of innovation from incumbent vendors, and high maintenance fees have changed many organization’s perspectives.

Drivers include

  • High maintenance fees/Upgrade costs
  • Purpose built fnctionality of packages is better than that of the central system
  • Geographic requirements
  • Regulatory compliance
  • Need to innovate.

For the full post by R “Ray” Wang of Software Insider