Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.
ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.
Two-tier ERP comprises software and hardware that allows these companies run the equivalent of two ERP systems at once: one at the corporate level and one at the division or subsidiary level. For example, a manufacturing company uses an ERP system to manage the company across the organization. This company uses global or regional suppliers, production centers, and service providers to support the manufacturing company’s customers.
These suppliers, production centers, and service providers are independent companies that maintain their own brand and business model. These companies also have their own workflows and processes. Given the realities of globalization, enterprises continuously evaluate how to optimize their regional, divisional and product-based manufacturing strategies to support strategic goals and reduce time-to-market while increasing profitability and delivering value. With two-tier ERP, these companies continue operating under their own business model separate from the manufacturing company. Since these companies' processes and workflows are not tied to manufacturing company's processes and workflows, they can respond to local business requirements in multiple locations
Factors affecting enterprises adopting two-tier ERP systems are the globalization of manufacturing or the economics of sourcing in emerging economies . Two-tier ERP strategies give enterprises agility in responding to market demands and in aligning IT systems at a corporate level.
ERP (Enterprise Resource Planning) systems typically include the following characteristics:
An integrated system that operates in real time (or next to real time), without relying on periodic updates.
A common database, which supports all applications.
A consistent look and feel throughout each module.
Installation of the system without elaborate application/data integration by the Information Technology (IT) department.