According to a recent study by Constellation Research, companies are increasingly seeking two-tier ERP deployments to support distributed operations.  While running a mixture of different ERP systems in a hub-and-spoke manner is nothing new, the percentage of companies open to two-tier deployments has more than doubled in recent years.

According to Constellation analyst R “Ray” Wang’s two-tier ERP report, which was published in February, the percentage of companies considering a two-tier ERP deployment has risen from about 21 percent two years ago to 48 percent this year. The numbers were taken from three year’s worth of data, and are based on the responses of at least 235 people for each survey.

The study cites several causes for this move, including the need to address multiple types of businesses, different localization requirements, and the desire to optimize and modernize existing (i.e. “legacy”) ERP systems. The expense of running a single massive ERP system, and the difficulty of upgrading and modifying single massive ERP systems to meet changing business requirements, are also big factors at play here. Companies that are successful with a two-tier system report a reduction in costs and better overall business value than the one-size-fits all approach, he writes.

“As companies become more global in size, they realize they want to have a single instance of ERP at the corporate level for doing financials,” Humphlett says. “But when it comes down to running the manufacturing at localized locations, they realize they don’t need a big behemoth financial system. They need smaller, more nimble ERP solutions to be able to meet the needs of those local locations, as well as being able to manage the manufacturing and the production and the planning that’s required for those local operations.”

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