What is Tier 1, Tier 2 & Tier 3 ERP Software?

If you're researching ERP software, then you've probably heard of analyst firms such as Gartner talk about Tier 1, Tier 2 and Tier 3 ERP software.

If, like many of our readers you're new to the world of ERP software or simply topping up your knowledge, then maybe you're thinking:

'What are ERP Tiers? What is Tier 1 ERP software?'

'What are examples of Tier 2 ERP software? What is Tier 3 ERP software?'

'Which Tier of ERP system is right for my business?'

In this article we'll tell you all about the different Tiers of ERP software and help you understand if you should buy Tier 1, Tier 2 or Tier 3 ERP software for your organization.

Contents:

Tier 1 ERP Software

Tier 2 ERP Software

Tier 3 ERP Software

Tier 1 ERP Software

What is Tier 1 ERP Software? Which businesses use Tier 1 ERP Software?

Tier 1 ERP software is typically used by the largest and/or most complex organizations and multinationals in the world, or those with the ambitions of becoming market leaders. Firms such as Gartner will typically describe Tier 1 ERP users as having in excess of 1000 employees and revenue of at least $500M USD per annum.

Only Tier 1 ERP software can consistently and reliably solve the problems of some of the largest organizations in the world, covering accounting, manufacturing, production, project management and programme management and more for companies such as Coca-Cola, Nike, P&G and more.

Tier 1 ERP Advantages & Disadvantages

Advantages

• Tier 1 ERP software is typically extremely robust and can be made to fit almost any business scenario.
• Typically Tier 1 ERP is supported by millions of R&D and investment from ERP vendors to continuously improve it.
• Tier 1 ERP software is well used by other large companies, meaning you're rarely the only other company using it or on the same path.

Disadvantages

• Tier 1 ERP software can be expensive to purchase.
• Tier 1 ERP systems can take a long time to implement.
• Tier 1 ERP systems can be risky to implement as they are so complex
• Maintaining Tier 1 ERP software can be expensive and require some top IT or consulting talent.

Tier 1 ERP Vendors & Software

SAP

SAP is synonymous with Tier 1 ERP vendors with it's ERP solution ECC/6  and SAP S/4 HANA. However SAP also provides Tier 2 ERP solutions as well such as SAP Business One.

Download SAP Business One Guide >>>

Download SAP S/4 HANA Guide >>>

Oracle

Oracle is also a Tier 1 ERP heavyweight, providing large enterprises with ERP solutions such as JD Edwards and Ebusiness Suite as well as it's latest rendition - Oracle ERP Cloud. Like SAP, Oracle also provides Tier 2 ERP software like Netsuite.

Download Oracle Netsuite Guide >>>

Microsoft

Microsoft is arguably also a Tier 1 ERP provider with it's ERP product Microsoft Dynamics 365, although some would say it doesn't make the qualification.

Tier 2 ERP Software

What is Tier 2 ERP Software? Which businesses use Tier 2 ERP Software?

Tier 2 ERP software are ERP systems typically used by midmarket and growing businesses with anywhere from 20 through to 1000 employees and often more. Tier 2 ERP systems fit businesses with limited business process complexity and geographical coverage too, such as services based businesses.

Tier 2 ERP Advantages & Disadvantages

Advantages

• Tier 2 ERP software can typically be implemented in 3 months to 1 year depending on project complexity.
• Tier 2 ERP systems are typically cheaper to license than Tier 1 ERP software, costing anywhere from $20,000 per annum and upwards depending on the number of users.
• Tier 2 ERP software can be more agile and easier to configure and change, making it a great fit for dynamic businesses.

Disadvantages

• If your business is on a hyper-growth trajectory, Tier 2 ERP software can sometimes limit your options and you'll be a big fish to your ERP vendor or consultancy.
• Tier 2 ERP software may not offer complete depth of functionality in any particular area such as manufacturing. Organizations with complex business processes but small annual revenues may have no other choice but find this limiting. This is often true in the pharmaceutical industry,

Tier 2 ERP Vendors & Software

Oracle Netsuite

Oracle Netsuite is a popular Tier 2 Cloud ERP software which is used by thousands of midmarket businesses all around the world in various industries such as manufacturing, services, SaaS, healthcare and more.

Download Netsuite Guide >>>

SAP Business ByDesign

SAP Business ByDesign is a Tier 2 Cloud ERP system which is commonly used by growing organizations in the pharmaceuticals, high tech, professional services and healthcare space.

Download SAP Business ByDesign Guide >>>

Sage Intacct 

Sage Intacct started off life as a Cloud financial management tool but has slowly evolved into a Tier 2 ERP solution for companies in the professional services & consulting space, ecommerce and healthcare industries.

Download Sage Intacct Guide >>>

Workday

Workday is arguably a Tier 1 ERP solution but we think of it as a Tier 2 ERP solution here at ERP Research. 

Click here to see our full list of Tier 2 ERP Software >>>

Tier 3 ERP Software

What is Tier 3 ERP Software? Which businesses use Tier 3 ERP Software?

Tier 3 ERP software are ERP systems which cater for a very specific niche or industry or geographic location. For example, some Tier 3 ERP software is specifically designed for the food manufacturing industry or for companies based in Sweden.

Tier 2 ERP Advantages & Disadvantages

Advantages

• Tier 3 ERP software will specifically cater for the problems you might face in a specific geography or industry and will deliver a solution which exactly solves those problems.
• Tier 3 ERP systems are typically cheaper to license than Tier 1 or Tier 2 ERP software, costing anywhere from $20,000 per annum and upwards depending on the quantity of users.

Disadvantages

• Although Tier 3 ERP software can solve problems in a specific industry or geography and hit specific niche needs, they may be lighter in areas where Tier 1 or 2 ERP software is strong. For example, a Tier 3 ERP software might provide great capabilities for pharmaceutical manufacturing, but be lighter in financial management for companies with multiple entities around the world.
• The market for Tier 3 ERP consultants can be limited and it can be hard to find experienced ERP developers that can support your ERP system.