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April 20, 2015
Two-tier ERP is when organization having 2 separate different ERP. One having Tier-1 ERP (Oracle/SAP) and its subsidiary using lower type ERP or Tier-2 such as Microsoft Dynamics.
Company that adopt two-tier ERP as a strategy would gain many benefits and among others are:
The cost to acquire Tier-1 ERP is between $13 million to $17 million according to an estimate publish by CIO magazine and with Tier-2 or lower, the cost would reasonably cheap and since adopting two-tier ERP, there is no need for Tier-1 ERP for subsidiary and subsequently can save cost.
Subsidiary with their Tier-2 ERP is more easy to configure and enable for improve innovation. They would find that their ERP is easy to customize as compared to their main company Tier-1 ERP system.
As company expanding rapid, they would want a system that could follow suit. However with Tier-1 that cannot keep up with the the changing environment because it takes long time and cost so much to deploy. Tier-2 on the other hand is easy to configure and easier to control over fast changing environment
For that, Two-tier ERP is more strategic for fast changing company and large organization with multiple unique subsidiary
R “Ray” Wang, “Tuesday’s Tips: When to go with a Two-Tier ERP Strategy,” Enterprise Irregulars, March 2010