Enterprise Resource Planning (ERP) systems are relatively new and quickly evolving software platforms that help businesses streamline all aspects of their processes. ERP software acts as a centralized database with applications designed specifically for each department of your business; from inventory management to human resources to finance to production.
The current market seems to be overflowing with different types of ERP systems at a wide range of price points, making it hard to know which is the best fit for you business. There are different deployment models, tiers, specifications, and target industries. Industries can vary from retail to consumer markets to energy and industrial.
At Godlan, we focus on helping manufacturers across all industries, so this article will be specific to discussing the kinds of ERP systems that best suit manufacturers.
What Are the Types of ERP Systems?
When it comes to classifying the kinds of ERP systems, you could sort them in any number of ways, from industry specification to size to usability. However, we’ve taken into account the two biggest factors most of our customers want to know when they ask us about types of ERP systems: deployment model and size.
ERP systems can be deployed in one of three ways:
- On-premise
- Cloud-based
- Hybrid
The size of the ERP system includes factors like:
- How much your ERP system will cost
- How long it will take to implement
- Whether or not it can scale with your growing company
- Level of customization
Read on as we dive into detail about these types of ERP systems and discover which is the best solution for you.
3 Types of ERP Deployment Models for Manufacturers
Deployment describes where your ERP will “live”. It’s a software solution, so like any software, it can be stored on local servers or remote servers, also known as “the cloud”. The deployment model you choose will be specific to your business.
On-premise ERP Systems
On-premise ERP systems are stored locally at your facility. They use your hardware and an intranet system that cannot be accessed on computers outside the facility via the Internet. This type of ERP offers full control over the system and data.
Pros of On-premise ERP
- Enhanced security for sensitive data
- Improved protection of intellectual property (IP)
- Capable of extensive customization
- Lightning-fast server response time
Cons of On-premise ERP
- Requires the upfront cost of buying hardware like servers
- Requires more space to store hardware
- Cannot access the system from afar
- The upfront cost of purchasing the software license
- Require advanced IT infrastructure and professionals
Who is on-premise ERP good for?
On-premise ERP systems are best for very large companies with annual revenue in the multiple billions, like Amazon and Walmart. That’s because large companies must have the IT infrastructure and expertise to support on-premise systems.
Large companies can afford the extensive custom configuration on-premise systems required. In fact, these heavy hitters probably opted for on-premise systems so they could customize them to kingdom come, with the system becoming virtually unrecognizable from what it looked like out of the box.
Finally, on-premise ERP systems are an excellent solution for companies dealing with sensitive data and high-value IP, such as those in the medical, pharmaceutical, government, aerospace, and defense sectors.
Cloud-based ERP Systems
Cloud-based ERP systems, a type of Software as a Service (SaaS), are stored remotely on servers that may be located across the country or even the world. In other words, cloud ERP systems are stored on the Internet and can be accessed from anywhere. This type of ERP system has become increasingly common thanks to its many benefits.
Pros of Cloud ERP
- Accessible via the Internet, either at the facility or on the go
- Purchase as a monthly subscription rather than all at once
- Scalable without extensive customization requirements
- Lower costs upfront
- Regularly updated by the vendor for security and improved features
- Easily customizable
- Can be integrated with third-party applications
Cons of Cloud ERP
- Inaccessible if the Internet goes down
Who are cloud-based ERP systems right for?
Cloud-based ERP systems are best for small to mid-sized businesses with up to $1 billion in yearly revenue. The monthly subscription model for deployment allows growing manufacturers the ability to balance future investment with current needs. Cloud-based ERP systems can be scaled up or down easily without the need to hire additional IT personnel or upgrade infrastructure.
Hybrid ERP Systems
Hybrid ERP systems are exactly what they sound like: a combination of on-premise and cloud-based ERP solutions. This approach allows companies to maintain critical applications on-site while leveraging the cloud for other functionalities.
3 Types of ERP Systems by Size
The scope of your business needs will help you narrow down your ERP choices, as well. You don’t want to spend more than you need, but you do want a system that can grow with your business.
Large ERP Systems
Large ERP systems like SAP and Oracle are designed for multinational and large enterprises. These systems are built to be heavily customized, attempting to fit the needs of any and all industries. They offer extensive functionality, such as advanced analytics and global finance management, often requiring a team of IT experts to set up and manage. Because they are so complex, large ERP systems call for a high investment of time and money for implementation and on-going support.
Small to Mid-Sized ERP Systems
Small to mid-sized ERP systems are built for companies with fewer resources and simpler operational needs. They also tend to niche down, focusing on the needs of a specific industry.
For example, Infor SyteLine CloudSuite Industrial is designed specifically for manufacturers, so it has all the essential ERP modules for manufacturers out of the box and includes additional applications that growing manufacturers can upgrade to in the future.
Essential ERP features for manufacturers include inventory and warehouse management, customer relationship management (CRM), production planning capabilities, analytics and reporting features, customizable dashboards, accounting, MES, and more.
In other words, small to mid-sized ERPs are ideal for growing businesses looking to streamline their operations without a massive upfront investment.
Generic Out-of-the-Box ERP Systems
Small businesses often opt for out-of-the-box ERP solutions. These systems are pre-configured so they can be deployed quickly with minimal customization. Like large ERP systems, these systems attempt to be one-size-fits-all solutions.
They may lack specific features required by some industries, but they offer an affordable way for businesses to dip their toes into ERP software. If you’re looking for a straightforward, hassle-free solution, these systems may work well for you.
How to Choose the Right Type of ERP System for Your Business
ERP selection should be approached in a methodical way. We recommend starting with a business process review (BPR) so that your business goals, threats, strengths, and weaknesses are written down in black and white.
Next, consider which deployment method is right for your business: on-premise, cloud-based, or hybrid. What are the core functionalities you need from an ERP system? Factor in your IT infrastructure, security requirements, and budget.
The size and scope of your business will help you narrow down ERP vendors. Research each vendor and ensure they have a strong track record in your industry. Reach out to ERP consultants to get expert insights into your short list of vendors.
Don’t forget to budget for implementation and training. Learning a new system may take employees time.
For Manufacturers, We Recommend Infor SyteLine
At Godlan, we have over 40 years of experience helping medium-sized businesses streamline production, win more customers, and challenge their competition through successful Infor SyteLine ERP implementation. If you’re not sure if Infor is right for your business, contact us to set up a consultation today.
