A Comprehensive Guide to Types of ERP Systems (2023)

In today’s fast-paced business environment, organizations need sophisticated tools to manage their operations and stay ahead of the competition. Enterprise resource planning (ERP) systems have become the backbone of modern businesses, offering a centralized platform for managing various operations, promoting data flow, and improving efficiency.

But with so many different types of ERP systems available, how can you find the one that best fits your organization’s needs? Join us as we explore the world of ERP systems and provide a comprehensive guide to making informed decisions.

Short Summary

  • Understanding ERP. Systems are essential to streamline business processes and improve efficiency.

  • ERP systems can be classified based on size, functionality, deployment method, or industry focus.

  • Organizations must consider cost-effectiveness and features when choosing an appropriate system. Customizing the solution with an integrator may help optimize current procedures.

Understanding ERP Systems

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ERP or enterprise resource planning systems are business process management software that centralizes applications to manage various operations, including accounting, human resources, and sales. By promoting the flow of data among these applications, ERP systems improve efficiency and profitability and save time for organizations of all sizes and industries. Enterprise resource planning (ERP) systems are a crucial component of modern businesses and have evolved to cater to the diverse needs of different industries and organizations.

With the advent of cloud computing, many ERP systems have transitioned to cloud-based platforms, offering increased accessibility and cost savings compared to traditional on-premises warehouse management systems. These cloud-based ERP systems enable organizations to access critical business processes and data from any device with an internet connection, ensuring seamless operations and real-time decision-making.

Many different ERP systems are available in the market, each catering to specific needs and industries. Organizations can choose from a wide range of cloud-based ERP software solutions that best fit their requirements, from small businesses to large enterprises. Some of the top ERP systems include Oracle Cloud ERP, Microsoft Dynamics, and SAP Business One, offering various deployment options, hosting and deployment services, and features to streamline business processes and improve efficiency.

Classifying ERP Systems: An Overview

To better understand the vast landscape of ERP systems, it’s helpful to classify them based on various criteria, such as size, functionality, deployment method, and industry focus. These classifications can assist decision-makers in narrowing down their choices and selecting the most appropriate ERP solution for their organization’s needs.

Let’s dive deeper into each classification and explore the different types of ERP systems available.

Size-Based Classification

Size-based classification of ERP systems includes Tier I, Upper Tier II, Lower Tier II, and Tier III ERP systems. Tier I ERP systems are specifically tailored for large corporations with annual revenue exceeding $750 million, offering scalability and catering to various industries. Examples of Tier I ERP systems include SAP and Oracle, which are designed to handle complex business operations and processes for large organizations.

Upper Tier II and Lower Tier II ERP systems are designed to serve small to mid-sized companies with annual revenue ranging from $10 million to $250 million. These ERP systems, such as Odoo, Netsuite, and, offer a more flexible approach to managing core business functions and can be easily configured or customized to fit the unique needs of smaller organizations and midsize companies.

Tier III ERP systems, also known as “ERP in a box,” are easy-to-use solutions that come ready to be installed and utilized immediately for core business functions yet cannot be easily configured or customized. Examples of Tier III ERP systems include Quickbook and These systems are suitable for small businesses that require a straightforward ERP solution to manage their operations.

Functionality-Based Classification

Functionality-based classification of ERP systems includes core ERP, extended ERP, and vertical ERP systems. A core ERP system is a fundamental ERP system that offers essential functionalities, including finance, accounting, procurement, manufacturing, inventory management, order management, supply chain management, customer relationship management, and human resources management.

Extended ERP systems go beyond the core ERP system by offering supplementary functionalities such as analytics, business intelligence, and reporting. These systems allow organizations to gain insights from their data and make informed decisions.

Vertical ERP systems are designed and optimized for a particular industry, such as healthcare, retail, or manufacturing. These systems cater to their target industries’ unique needs and requirements, offering specialized modules and features that may not be available in core or extended ERP systems. Vertical ERP systems enable organizations within specific industries to streamline operations and achieve greater efficiency by leveraging industry-specific functionalities.

Deployment Method Classification

Deployment method classification for ERP systems includes cloud-based, on-premises, and hybrid ERP systems. Cloud-based ERP systems, such as Oracle Netsuite, Microsoft Azure, Infor CloudSuite, and Acumatica Cloud ERP, enable businesses to administer their entire business operations from a unified, centralized location accessible via a web browser or mobile app. Utilizing a cloud-based ERP system does not impede development and enables firms to extend in the future and incorporate new capabilities and tools when necessary.

On-premises ERP systems, like SAP ERP, SYSPRO ERP, and Microsoft Dynamics GP, are installed on an organization’s computers and servers. These systems provide complete control over the system, allowing organizations to customize each module and component to fit their specific needs. However, the cost of an on-premises ERP system is determined by the size of the company and the number of users, making it a more expensive option in some cases.

Hybrid ERP systems combine the advantages of both on-premises and cloud software-based systems, offering organizations the flexibility to choose the best deployment method for their needs. By leveraging the benefits of cloud computing and on-premises deployment, hybrid ERP systems provide a balanced approach to managing business operations.

Industry-Focused Classification

Industry-focused classification of ERP systems includes generic and industry-specific ERP systems. Generic ERP systems, like Epicor ERP, Infor ERP, and SAP Business One, offer a range of capabilities for organizations in various industries. These systems generally provide reliable financial management and accounting capabilities but may not offer extensive operational support. However, generic ERP systems are typically more cost-effective than industry-specific ERP systems.

Industry-specific ERP systems are specifically designed for certain businesses. For example, they can be tailored to a niche industry, like professional services or distribution. These systems offer essential modules and tools, and features unique to the respective industry. A generic ERP cannot achieve such features. Industry-specific ERP modules and systems may offer a more comprehensive solution for organizations within their target industries, though they may come with restricted terminology and setup functionalities.

Ultimately, choosing between a generic ERP system and an industry-specific ERP system depends on the organization’s unique requirements and budget. While generic systems may be more cost-effective initially, industry-specific ERP systems offer numerous functionalities that can accommodate a company’s particular needs.

Top ERP System Solutions by Company Size

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The ERP system that is most suitable for your organization depends on its size and specific needs. Modern ERP solutions such as Oracle Netsuite, Sage, and Acumatica can be a perfect fit for small businesses, offering the essential features and functionalities required for managing day-to-day operations.

On the other hand, midsize businesses may benefit from ERP systems like Microsoft Dynamics 365 Business Central, Oracle JD Edwards, and Oracle NetSuite, designed to cater to the unique requirements and challenges faced by organizations of this size.

For large enterprises, ERP systems like Oracle ERP Cloud and SAP S/4HANA offer a comprehensive range of modules, tools, and features to handle complex business operations and processes. These enterprise-level ERP systems are highly scalable, ensuring they can grow and adapt to the organization as its needs evolve.

Key Factors to Consider When Choosing an ERP System

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Selecting the right ERP system for your organization involves careful consideration of various factors, such as cost, scalability, features, and user experience. The cost of an ERP system includes not only the price of the software itself but also the costs associated with implementation, customization, and maintenance. It’s crucial to evaluate the total cost of ownership when comparing different ERP systems to ensure that you’re making the most cost-effective decision for your organization.

Scalability is another critical factor to consider when selecting an ERP system. Your ERP system should be able to scale with your organization as it grows and adapts to changing business needs. This includes the capacity to add new modules, features, and integrations as required, ensuring that your ERP system remains a valuable asset for your organization over time.

Finally, consider the features and user experience offered by each ERP system. Look for functionalities such as reporting, analytics, and automation that can help your organization gain insights from its data and make informed decisions. The user experience should also be a priority, with aspects like ease of use, user interface, and available support playing a crucial role in the overall success of your ERP system implementation.

Customizing Your ERP Solution: The Role of ERP Integrators

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Customizing your ERP solution to fit your organization’s unique needs is possible with the help of ERP integrators, companies that specialize in adapting ERP software to meet specific requirements. these ERP vendors and integrators can bring a specialized level of proficiency that can help to enhance your business, optimize your ERP deployment and usage, and sidestep common issues.

ERP integrators can assist in optimizing current business procedures and recommend ERP applications that are suitable for your organization’s requirements. By working closely with your organization and understanding its unique needs and challenges, an ERP integrator can help tailor your own ERP integration solution to ensure that it delivers the maximum value and benefits.

When considering whether to engage an ERP integrator, it’s essential to weigh the potential benefits against the costs and effort involved. The expertise and knowledge provided by an ERP integrator can be invaluable in ensuring a successful ERP implementation, but it’s crucial to carefully evaluate your organization’s needs and budget before making this decision.

The Future of ERP Systems: Trends and Innovations

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The future of ERP systems is shaping up to be an exciting one, with advancements in technology driving innovation and new capabilities. One such trend is the integration of Artificial Intelligence (AI) and automation into ERP systems, enabling organizations to streamline their operations and improve efficiency by automating manual processes and tasks to automate manual processes.

Cloud computing is another significant trend in the world of ERP systems, as more and more organizations are adopting cloud-based solutions for their ERP needs. Cloud-based ERP systems offer increased accessibility, cost savings, and flexibility compared to traditional on-premises systems, making them an attractive option for organizations of all sizes.

Mobile access is also becoming increasingly important in the world of ERP systems, as businesses seek to access critical information and processes on-the-go. Many modern ERP systems now offer mobile apps and responsive designs, ensuring that users can access the system from any device, at any time.

As technology continues to evolve, the future of ERP systems promises to deliver even more powerful and innovative solutions to help organizations streamline their operations and achieve greater success.

Evaluating the ROI of Your ERP Investment

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Evaluating the return on investment (ROI) of your ERP system is an essential step in understanding the value and benefits it brings to your organization. To calculate the ROI, divide the expected benefits, including direct and indirect savings, by the expected cost of the system and multiply by 100. It’s important to note that the ROI percentage may vary depending on the specific system and the company using it.

Understanding the costs associated with ERP implementation is crucial for evaluating the ROI of your investment. These costs include the price of the software, hardware, and any additional services required to get the system operational, such as consulting fees, training, and customization. Maintenance and upgrade costs, which encompass any supplementary software, hardware, and services required to maintain the system, should also be taken into account.

By carefully considering these costs and the anticipated benefits of an ERP system, organizations can make a more informed decision about investing in a particular ERP solution. The goal is to achieve increased efficiency, accuracy, customer service, and cost savings by implementing an ERP system that delivers a positive ROI.

Preparing for a Successful ERP Implementation

To ensure a successful ERP implementation, engaging in thorough planning, consultation, analysis of ERP systems, and selection of the right ERP software for your organization’s needs is essential. The planning process involves engaging stakeholders, forming the project management team, and outlining a plan with milestones and deliverables. Consulting with the relevant stakeholders is crucial to ensure everyone agrees with the ERP project and that the chosen system aligns with the organization’s goals and requirements.

Enterprise consultants can help refine existing business processes and suggest suitable ERP applications based on business needs. They can also assist with analyzing different ERP systems, and researching the various types of legacy systems and features to determine the most appropriate for the organization.

Selecting the right ERP software system is a critical step in the implementation process. Organizations should carefully evaluate the options available, considering cost, scalability, features, and user experience, to ensure they choose the ERP system that best fits their needs and requirements.

By planning, consulting, and analyzing ERP systems, organizations can greatly increase the likelihood of a successful implementation and enjoy the many benefits that an ERP system can bring.


In conclusion, ERP systems are a powerful tool for organizations of all sizes and across multiple industries, offering a centralized platform for managing various operations, promoting data flow, and improving efficiency. With a wide range of ERP systems available, decision-makers must understand the different classifications, features, and deployment options to make an informed choice. By carefully considering key factors such as cost, scalability, and user experience, organizations can select the right ERP system that meets their unique needs and delivers a positive return on investment. As technology continues to evolve, the future of ERP systems promises even more innovation and exciting developments to help businesses streamline their operations and achieve greater success.

Frequently Asked Questions

What are the three common types of ERP?

ERP systems come in three distinct flavors: cloud, on-premises, and hybrid. Depending on the organization’s needs and goals, each type of ERP system can increase productivity and efficiency.

Is ERP a type of SAP?

Yes, ERP is a software as a service type of SAP. SAP SE provides an enterprise resource planning (ERP) software solution called SAP ERP that companies use to manage their core business processes.

SAP ERP integrates various modules to provide a unified system for accounting, sales, financial management module production, human resources, and other business-related operations.

What are the four types of ERP?

ERP systems come in many shapes and sizes, but they can generally be broken down into four types: Box ERPs, Large Scale ERPs, Intermediate and Flexible ERPs, and Industry Specific ERPs.

These distinct categories allow users to easily identify and select the best Enterprise Resource Planning software system for their organization’s needs.