3 Types of ERP Software

Enterprise resource planning (ERP) software is gaining momentum in the global market as companies are embracing the economic recovery and seeking to gain more control over internal processes. The challenge in adopting ERP, however, is found in the different types of ERP software. The sheer volume of providers alone is enough to send any key decision maker into research mode to narrow the selection.

Merely deciding on a key vendor is not enough – you must first evaluate the different types of ERP software to determine if yours is the right environment for an on-premise deployment, cloud ERP or a hybrid of the two.

The Argument For or Against On-Premise Types of ERP Software

Long before companies ever truly embraced the concept of leveraging applications in the cloud, the on-premise deployment was the only choice. This presented a challenge for the smaller company without the capital to invest in the hardware, software and licensing fees associated with different types of ERP software options. Today, on-premise is still the optimal choice for a number of companies as they seek to leverage the value of owning their own equipment and controlling all the managed data within the ERP platform.

While the cost of deployment can be significant on the front end, there are no subscription fees over time, and a company’s IT team has full control over performance, operation, applications, access and upgrades. With this control comes considerable deployment time as you must work through all processes in each department, develop a plan and launch accordingly.

Types of ERP Software Available in the Cloud

When considering different types of ERP software, examining the options available in the cloud is an important step. ERP software delivered as a hosted solution eliminates the need for significant upfront capital investments in hardware, software and infrastructure. The smaller your company, the more cloud-based ERP may be as it also delivers increased functionality and instant updates to servers residing on the provider’s side. It is not necessarily a lower cost option, however, as subscription rates over time can easily exceed the investment of an on-premise solution.

The promise of quicker deployment can easily be negated if your processes are complicated enough to warrant extensive planning. You also leave much of the control, disaster recovery, business continuity and security to the provider – can you trust they will deliver on their promises?

Types of ERP Software Include the Hybrid

Companies that are ready to embrace the potential in the cloud, yet still have significant in-house investments are considering a hybrid approach to the different types of ERP software. The hybrid approach allows you to host part of your ERP software in the cloud, while keeping certain applications or functions on-premise. One option is to support customer relationship management (CRM) as it pertains to ERP in the cloud, while keeping accounting and warehouse processes on-premise so as to maintain internal control over those functions and associated data.

While the hybrid approach does allow you to ease your migration to the cloud, it can be more costly in the long-run as you are duplicating processes. At the same time, you are still making investments in hardware and employing the necessary IT resources to support your on-premise solutions.

Determining the best approach to the different types of ERP software available will depend greatly upon your needs assessment, current investments and projections moving forward. There are a number of vendors offering solutions that fit all three platforms, including Microsoft and Oracle, yet you may find integration to be a key factor in your decision. At that point, interoperability and certification requirements will help you narrow your options to find the best fit.