Types of ERP Software

In this article we'll talk about the different types of ERP software and systems and uncover how the ERP software market categorises itself.

If you're researching ERP software and want to understand which type of ERP is best for your business, then you're in the right place.

The Different Types of ERP Software:

So let's try to understand the different ways in which ERP software is divided and typified:

Cloud, On-Premise or Hybrid ERP Software

The first crucial element of an ERP software is how that ERP system is hosted. ERP software can be delivered via three different types of hosting. That is Cloud ERP software, On-Premise ERP software and hybrid ERP systems.

Cloud ERP software is an ERP system which is hosted and usually maintained by a third party under one commercial agreement, also known as software-as-a-service. On-Premise ERP software is ERP which is hosted by your own organization. Hybrid ERP software is typically On-Premise ERP software which is hosted by a third party.

Tier 1, Tier 2 and Tier 3 / Industry or Niche ERP Software

Tier 1 ERP systems are typically referred to as the top crust of enterprise ERP software. These ERP systems are from vendors such as SAP, Oracle or Microsoft. This ERP software can solve even the most complex back office problems and at scale and serve some of the largest multinationals around the world such as FTSE 100 or Fortune 500 companies.

Tier 2 ERP systems typically serve organizations that are in the 'midmarket' and that have anywhere from 200 through to 5000 employees. These are ERP solutions such as Oracle Netsuite, Microsoft Dynamics Business Central, SAP Business ByDesign, Infor and many more.

Tier 3 ERP software, also referred to as industry or niche ERP software is an ERP system which is specifically designed for a particular niche, whether that be a specific geography or industry. For example, some industries have such specific business processes, that only specially designed ERP software can provide their businesses with a competitive advantage.

Open Source ERP vs Proprietary ERP 

The next distinction between ERP software is whether is is Open Source ERP or Proprietary ERP software which are the two main types of ERP licensing principles.

Open Source ERP software is source code and software which is freely available to download, implement, modify, expand and change according to your particular business needs. This makes it an excellent choice for businesses who want the ultimate flexibility, but on the other hand don't mind maintaining and bearing the risk of doing so. Examples of Open Source ERP software include the likes of Odoo.

On the other hand, Proprietary ERP software is software which is purchased from an ERP vendor, typically on a user basis. The ability to customize that ERP software is typically more restricted if it's possible at all. However, typically this means that the ERP vendor will commit to providing certain updates and maintaining or futureproofing the ERP in return. Examples of proprietary ERP software include SAP, Infor, Oracle, Microsoft and many more.