ERP Systems Classification by Types with Examples

Into

As a business grows and develops, the questions of its organization, management, and analysis become increasingly sensitive. This is especially important for enterprises with independent subdivisions such as subsidiaries, affiliates, branches, etc., including the foreign ones. In such cases, ERP or the Enterprise Resource Planning system comes in more than handy.

ERP is used for bringing together underlying business processes, data, and reports within a single digital complex. ERP system architecture might be quite hard to wrap your head around due to its all-encompassing nature. It covers finance, human resources management, acquisitions, balances, quality assurance, production technology, etc. 

All of this is divided into the three main components of the architecture:

• hardware;
• software;
• documentation.

Types of ERP

Let’s take a look at the basic classification of these multifunctional systems to decide on the most suitable one for a specific business.

1. Role of architecture in ERP

Many business managers may view the internal organization as a technical part of the process and are not interested in diving into this topic. This approach, however, is not correct because the architecture plays a determining role in making the final decision on a program, due to its inherent significance to the implementation and subsequent development rates. It is crucial to have a grasp of the current state of the company and its development strategy while designing ERP for architects.

The basic classification by the system designing methods is the following:

Indivisible architecture

Among the advantages of such an instrument are its adjustment and integration rates. Its functional blocks are tightly interconnected which allows avoiding some potential errors. But at the same time it renders the step-by-step integration unavailable and the further tweaking much more time, labor and resource consuming.

Modular architecture

This architecture provides for the step-by-step implementation. All the instruments can be customized to conform to a specific enterprise. The potential modules incomparability is a substantial threat, however, the flexible adjustment of all the components can solve this problem.

2. Depending on a purpose

The main goal for any ERP system is processes optimization of all the levels. But at the same time, we can’t neglect the peculiarities of a specific enterprise. Financial and oil industries, military-industrial complexes and some other fields are under strong government supervision. The same goes for national corporations and holding companies that have offices in many countries, which obligates them to consider the local legislation. 

The generalized classification by purpose:

Industry-level purposes

This structure of ERP system should be implemented in two cases:

• The processes peculiarities of the industry can’t be applied to the other fields. In this case, a system is created from scratch based on the specifics inherent to the particular industry.
• Management of a large company, where absolute figures justify the investments (0,1% ROI * $100M = $100 000).

General purposes

The attention in these systems is mainly focused on the data volumes, rather than the peculiarities of an enterprise. Between the computers and furniture manufacturing, there are not that many substantial differences that can be easily adapted to the needs of a company. Thus, the price of a less unique product is significantly lower. 

ERP for E-Commerce

These systems are usually quite complex and require special technical assistance. At the same time, many software manufacturers provide businesses with the appropriate supply and the SaaS (Software as a Service) which allows working from virtually anywhere the internet connection is available.

3. Depending on the type of organization

One of the most important items in the IT budgeting of a company is the software administrating expenses. In modern times there are many more ways for resource-saving than there was before when the software had to be installed on the company’s computers or servers. The earlier established classification was somewhat complemented with the appearance of cloud services.

Public cloud

Many users gain access to the resource and platform, which substantially affects the service cost due to its low uniqueness. “Standard product — low price”

Private cloud

Has high personalization due to being installed on the company’s rented or own production facilities. If needed, the software can be adjusted, with all the data isolated. However, this affects the scalability of a project and raises its cost considerably.

Hybrid cloud

The merge of the previous two types allowing for more effective expansion and adaptation to the client’s conditions. There projects cost more, but the advantages of SaaS-systems are guaranteed. 

They can be roughly divided into two types:

• common model — a user can adjust some of the product’s properties. Since its data is shared among the other clients, they can’t address the service supplier requiring global adjustments.
• selected model — the installation of a single copy on the contractor’s hardware, completely adjusted for the specific enterprise needs. The costs raise can be somewhat leveled out by having a common software kernel despite the divided databases of a company.

4. Application options

The practical application of the software is globally divided into:

• desktop systems (computer, smartphone, tablet) — the main drawback is the diversity of operational systems, that can be somewhat compensated for by the additional interface tools.
• web-versions of ERP systems are cross-platform, thus work on the majority of the popular browsers and provide extended functionality. The application of the system is limited only by the presence of a constant internet connection. The interface is not inferior to the PC version, while the portability is higher.

5. Licensing

The cost of the licenses can inflate the overall budget of the automation process by 15-20%, which will affect the implementation costs as well. 

These systems are generally divided into:

• Proprietary — software is considered complete but requiring some extra tweaking and adaptation to the needs of a specific company. However, such a license still needs to be paid for at the purchase.
• Open Source — software that has an open-source code and is nominally free to use. The expenses only come into place when certain functions are required, and not all the enclosed services. The main drawback is that to set up and adjust the program, some technical background is needed. This problem can be resolved by involving specialists, which will cause additional expenses.

Different variants for ERP systems

The diversity of enterprise resource management systems is fairly wide. Choosing the appropriate software, a company is often driven not only by the current situation but also by its development strategy induced ambitions. 

Some of the most popular manufacturers of such systems are:

SAP

One of the world-leading developers of the ERP-software, that introduces two basic solution technical sets:

• R/3. An integrated system that can adapt and be adjusted to the needs of a specific company of any scale. It uses the client/server ERP architecture, that works on the platforms such as Windows Server, OS/400 and Unix, using several packages without the Oracle, DB2 and SQL Server data types.
• B1. “Business” solutions, oriented mainly at small and medium businesses. It provides complete modules of resources, warehouses, CRM, finances and reports management.

Microsoft

Similarly so SAP, this company offers two solution sets for business, depending on the scale of an enterprise.

• Microsoft NAV. The best option for small and medium businesses. Includes CRM, supply chains, management, finances, and internet-sales analysis modules.
• Microsoft AX 2009. Optimal for medium-sized, large businesses and also companies operating abroad. Such functionality allows for higher adjustability as compared to Microsoft NAV, and is the best option for manufacturing, service-providing, wholesale and retail organizations.

Baan

This company is oriented in specific fields with peculiar supply chains, working on different methodologies. Among the clients of the company are giants such as Boeing Company, Solectron, Flextronics, British Aerospace & Engineering Systems, Ferrari and Fiat, which makes this program optimal for engineering and contracting enterprises. 

The software uses block-diagrams as the basis for processes and procedures documentation and has numerous tools for adjustment and adaptation to the specific requirements of an organization.

Oracle 

This corporation offers three basic solutions to choose from depending on the enterprises’ needs.

• EnterpriseOne. Standard modules are characterized by a profound understanding of business processes, their requirements, and uniformity. They incorporate CRM, analysis, also CRM, finance, capital assets, human resources, production management, etc. If needed, they can be complemented and adapted according to specific fields as building construction, food industry, real estate.
• E-Business Suite Financials. Field of finance-oriented, this software offers modules for the income and expenditures, planning, provisioning, budgeting, and multivariate analysis. 
• PeopleSoft. An adjustable package that works on a wide range of systems without data and architectures, allowing for easy adaptation to different types of activity and support of complex business requirements.