When selecting an ERP system, it is important to consider what functionality your business will need within the next five years. Afterwards, you can compare ERP solutions and select the best fit depending on the business requirements, trends, functionalities and features. The specific attributes and capabilities sought from an ERP system should change depending on the particular business needs. For example, a retailer likely differs in its enterprise resource planning needs from a manufacturer.
While ERP systems were typically used by larger firms in the past, smaller businesses are now able to explore enterprise resource planning due to the growing options for customization through technological innovation. Therefore, although another company in your industry has adopted a particular solution, it doesn’t necessarily mean that it is the right solution for you. You need to go with what is right for your business process as it is vital for an effective implementation and longevity.
To make it more simple, ERP solutions are split into Tiers and understanding the differences between ERP Tier 1, Tier 2, and Tier 3 is important to guide you in your choice.
A Tier 1 ERP solution is built with complexity of process in mind. For example, an ERP Tier 1 allows for several people to be working on a single function. The software can split out the task among multiple users. Although these solutions are rich with features they come at a pretty high price, they also take a long time to implement.
A mid-size company would need to look into ERP Tier 2 systems. Companies that implement these solutions have less complex needs than larger enterprises, still the level of complexity varies within this group. As a result, several players can be found in the Tier 2 category like Microsoft Dynamics 365 Business Central. These are developers that have focused on the complexity of only one very specialized industry.
Tier 3 ERP companies provide the most "niche” solutions and usually the most personal support. These smaller companies offer modern ERP, which is often developed around the needs of a specific type of manufacturer. These solutions have a low Total Cost of Ownership, and are relatively easy to implement.