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Enterprise Resource Planning (ERP) is a methodology and form of software designed to help organizations manage their business processes, workflows, and operations more efficiently. ERP merges a variety of business functions including finance, accounting, human resources, inventory management, sales, marketing, customer relationship management (CRM), and supply chain management (to name but a few) into a single application or platform. ERP software works to streamline business processes, increase visibility, aid the decision-making process, and reduce costs.
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There are several types of ERP software and tools on the market, each of which are categorized based on their function, how they are deployed, and target user.
The major types of ERP software are:
We will discuss each of these different types of Enterprise resource planning software types in greater detail below.
Example of Vault ERP
On-Premises ERP software is installed on servers and hardware that are owned and maintained by the company using them. This form of ERP software can require a medium to significant amount of resources and knowledge to configure, install, manage, and maintain.
Benefits of On-premise ERP software and tools include:
Cloud-based ERP software and tools are hosted on the cloud, versus locally or on-site. In this type of ERP solution, users and project managers access the system via an Internet connection, which means you will need reliable service for your team to function. Cloud-based ERP software has become more popular with the rise in remote work, in part due to their flexibility, scalability, and lower upfront investment.
Benefits of cloud-based ERP software include:
Open-source ERP software are free to use and modify to fit your company’s needs. Open-source tools, in general, are community-driven and resources for troubleshooting, configuring, and customizing Open-source ERP are readily available and (mostly) free of charge, though your team will need to implement things themselves.
Benefits of Open-source ERP software include:
Vertical ERP software is custom tailored for use in specific industries, such as manufacturing, software development, retail, construction, healthcare, and hospitality. As such, this type of ERP tool tends to come with industry-specific functions and features.
Benefits of vertical ERP software includes:
Horizontal ERP software, unlike its vertical counterpart, is designed for organizations that operate across different industries, such as sales and marketing. This type of ERP tool offers a wide range of functionalities and features that often require customization to meet the needs of the business using it.
Benefits of Horizontal ERP software includes:
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Tier 1 ERP tools and software are used by large enterprises that require complicated business processes, workflows, and operations. Tier 1 ERP systems tend to come with a wide range of features and functions built-in, but like other ERP solutions, can also be customized to meet the specific needs of your company and team.
Benefits of Tier 1 ERP software includes:
Tier 2 ERP tools are used by mid-sized companies that have simpler business processes, workflows, and operations than Tier 1 ERP users. They are, by and large, cheaper when compared to Tier 1 ERP platforms.
Tier 2 ERP software includes the following benefits:
In general, ERP software and tools offer the following benefits to businesses of all shapes and sizes, including:
That being said, ERP software also comes with several disadvantages as well, including:
In this project management tutorial, we discussed what ERP software is, the different types of ERP tools and systems, and the benefits of each type of ERP solution. Additionally, we learned the overall benefits of ERP software, which included helping businesses streamline processes and workflows, increased productivity, efficiency, and collaboration, and a reduction in operating tasks over time.
We also discussed the downsides of incorporating ERP software, which included higher initial costs, difficulties in setting up customized features, and making project more complicated. To help make the implementation of an ERP system go more smoothly, we suggest checking out our tutorial showcasing Tips for Enterprise Resource Planning to learn more Enterprise resource planning strategies.
We also have a terrific guide to the Best ERP Software and Tools to help you choose an ERP solution that is right for your team.
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