The modern business environment means that a business has to operate multiple systems, multiple teams, multiple processes, but still wants to grow. This is where an ERP application fits in. The problem is that not all ERPs are the same. In light of the fact that there are so many types, which one is best?

The ERP software is meant to integrate all aspects of the business, such as finances, human resources, inventory, sales, and operations, into a single, linked system. Depending on your business size, type, and needs, there are different types of ERP software available, which come with diverse advantages. For instance, some software provides complete control, while others are optimized for flexibility, speed, and certain industries.

In this blog, we’ll aim to demystify the various types of ERP software available. Whether you’re a startup, a big business, or somewhere in between, our post has been designed to assist you with choosing the right type of ERP software for your business.

Are you looking for professional ERP software development, implementation, or customization services? Contact us today! 

Types of ERP Software Explained 

1) On-Premise ERP

On-Premise ERP is installed on your own server, which means that your company takes full control of your data and system. It is ideal for a business that requires a high degree of customizability and that wants to control every aspect of the system on its own. 

The trade-off, of course, is that on-premises ERP is typically more expensive on the front end and requires a dedicated IT staff for support, maintenance, updates, and securing the system. For enterprises that need control, on-premises ERP is a great investment that is entirely in line with their interests. 

 2) Cloud-Based ERP

The Cloud-Based ERP Solution is run from the supplier’s servers, which are connected via the internet, ensuring that you don’t need to install the servers. This solution is ideal for your business when you are looking for scalability, speed, and flexibility. 

The best part about cloud-based ERP is that it is cost-effective, with fewer setup costs, predictable pricing, and the responsibility of ensuring updates, security, and maintenance is with the supplier, leaving your business to carry on efficiently. Cloud-based ERP is a great choice when you are looking for a solution that can be quickly implemented, easily accessed from a distance, and is scalable with your business. Examples include Oracle NetSuite and Odoo ERP.

3) Hybrid ERP

The whole idea behind hybrid ERP solutions is that they are all about taking the best from two different worlds. For instance, hybrid ERP solutions enable a business to implement some solutions on-premises as well as take advantage of cloud solutions.

This is particularly useful for businesses that are migrating to the cloud but are still not ready to abandon their existing systems. This provides businesses with the scalability, flexibility, and easy use that come with Cloud computing, but still provides the control that is offered by the existing infrastructure. This is essentially a seamless upgrade that is best suited for businesses that prefer to migrate on their own terms.

4) Vertical ERP

Industry-specific ERP systems have features and workflows that fit your industry from day one. Whether you manufacture goods, provide healthcare, sell merchandise, or educate students, they’re engineered to address the unique challenges and regulations that mould your operations. 

The advantage? You save on pre-built workflow, compliance support, and reporting tools that will definitely cut the time spent and reduce guesswork. Instead of trying to bend a generic system to fit your processes, an industry-specific ERP works just the way your business works. Like having a tool that already speaks your language and understands your daily operations.

5) ERP for Enterprise

Enterprise ERP software is utilized for the biggest of organizations with huge volumes of operations and dispersion across the globe. These systems are designed to store massive amounts of data, multiple departments, and even operations across different countries. 

What differentiates Enterprise ERP is the scalability, security, and the ability for customization of workflow and integration with other systems, while fully protecting sensitive data. If your business is large or growing, or it’s highly complex, Enterprise ERP puts the power and flexibility in your corner to run everything from under one roof without skipping a beat.

6) Open-source ERP

Open-source ERP provides access to the source code of the system, which means that adjustments could be made exactly in the way one’s business requires. It is ideal for companies that need to have full control over workflows, integrations, and features. 

A major advantage is that it significantly reduces licensing costs, making it a real attraction for tighter budgets. The only hitch: you’ll need technical skills to maintain and update this system, and troubleshoot any problems that arise. If your team has got the talent-or you’re prepared to bring it, open-source ERP can be a flexible, powerful, and cost-effective solution that grows with your business.

7) AI-powered ERP

AI-powered ERP takes business management to the next level with artificial intelligence and automation, so smarter, faster decisions can be made. These systems don’t just store data but analyze it, predict trends, and provide actionable insights that help your team stay ahead of the pack. 

With features like predictive analytics, intelligent reporting, and automated workflows, AI-powered ERP makes it possible to catch problems before they occur, automate mundane tasks, and free up your team to focus on strategy and growth. It’s like having a smart assistant right inside your ERP, helping your business be more efficient and confident in your decisions.

8) Mobile ERP

Mobile ERP means your business is literally in the palm of your hand. This is because mobile ERP is optimized for use on smartphones and tablet computers, which enable your workforce to interact with your business from anywhere in real-time. This is a game-changer for remote teams, or for people who work in the field because it ensures that everyone is connected and remains productive without being bound to an office desk.  

No matter whether an activity includes inventory verification, request approval, or sale verifications, Mobile ERP ensures that your business is always in motion, even when your staff is on the move. 

Factors Used to Categorize ERP Systems 

Factor 1. Deployment model 

Probably the first thing to decide when selecting an ERP system is where the software will run and how you’ll access it. This is what’s known as the deployment model, and it has a big influence on cost, flexibility, security, and long-term scalability. Common types of deployment include: 

• On-premise: deployed directly in a company’s own servers. 
• Cloud: The entire system is on a cloud infrastructure provider such as Google Cloud or AWS. 
• Hybrid: It is a mixture of both, where it is hosted both on cloud and on-premise infrastructure. For example, sensitive data can be hosted in in-house servers for the prevention of possibilities regarding data leaks.

Factor 2. Size of Organization 

Not all ERP systems are created equal, and that’s because not all businesses operate on the same scale. The size of an organization is a significant factor that defines which ERP solution would make sense, as a small team operates quite differently from a large, multiple-department enterprise. 

• Small Businesses: To small businesses, simplicity and affordability matter most. ERP systems for this segment focus on core features such as accounting, inventory, and basic reporting without overwhelming users with too many bells and whistles. 
• Large Enterprise: Large enterprises have to deal with high volumes of data, several departments, and often operate globally. The development of ERP systems for this level is highly scalable, deeply customizable, and designed to handle complex workflows. 

Factor 3. Industry or Business Vertical

While some ERP systems are meant to be used across industries, others are specifically tailored for certain business industries. Industry-focused ERP solutions understand the particular challenges of regulations and workflows of a specific field; thus, they are far easier to adopt and effective from day one. Examples are: 

• Manufacturing: The manufacturing-type ERP systems are designed for tackling complex production processes. They track raw materials, monitor production schedules, manage quality control, and allow for the optimization of supply chains. 
• Healthcare: Where systems support accuracy, security, and regulatory requirements for everything from maintaining patient records and billing to staffing and inventory management. 
• Retail: ERP for retail helps manage the stock level, tracks sales across channels, manages pricing, and gathers intelligence on customer behavior, thereby smoothing internal operations and enhancing the overall shopping experience. 
• Education: ERP systems for education institutions handle and manage admissions, student records, fee management, payroll, and reporting.

Factor 4. Functional Scope

Functional scope means what business processes an ERP system actually covers. Some ERP solutions focus on a very few core functions, while others bring multiple departments on one unified platform. The broader the scope, the more cohesive and efficient your operations are. The following are a few examples. 

• Finance and Accounting: The finance and accounting modules perform functions such as budgeting, invoicing, payroll, tax management, and financial reporting. 
• Human Resources: The HR module simplifies people management, bringing together hiring and onboarding, attendance, payroll, and performance tracking into a single system. 
• Supply Chain and Inventory: This ERP system allows tracking of inventory levels, vendor management, procurement optimization, and also prevents stock shortages or overstocking.  
• Sales and CRM: These systems manage lead tracking, sales pipeline management, record customer interactions, and analyze buying behavior. 

Factor 5. Level of Customization 

Of course, not every company does things the same, and that’s where the degree of customization required for an ERP system comes in. Some ERPs are pretty much ready to use right out of the box, while others can be tailored widely to match unique workflows and processes. Choosing the right level of customization can save time, reduce costs, and make sure the system truly fits your business. 

• Out-of-the-box/Standard ERP: Those that are already preconfigured with best practices in their specific industry and core modules. They are fast to implement and suitable for those organizations that do not need many special tweaks. 
• Configurable ERP: With a configurable ERP, you need not build from scratch. You may adjust the workflows, add and remove modules, and fiddle with settings to suit your business. 
• Highly Customized ERP: It is either designed or significantly modified with special business needs in mind. They can deal with complex workflows, integrate into other systems, and be adjusted for special processes that could not be supported by a standard solution.

Factor 6. Cost Structure

When choosing an ERP system, it’s not just about the features, but also about how you pay for it. Understanding the cost structure helps you plan your budget and avoid surprises later on. The pricing model of ERP may vary depending on deployment, the number of users, and the level of customization. 

• Subscription-Based (SaaS): This is also referred to as “Software as a Service.” In this, you pay a recurring monthly or yearly subscription fee for accessing the ERP via the cloud. 
• Per-user licensing: You pay for this license based on the number of users who will be accessing the system. 
• One-Time Licensing with Maintenance Fees: This used to be the traditional approach, usually for on-premise ERPs. You pay a one-time fee to own the software and then ongoing fees for maintenance, updates, and support. 

How to Choose the Right ERP System for Your Business? 

Picking the best available ERP solution is a significant consideration; it’s not only a matter of a software solution, but also how your business currently operates, how you want your business to grow in the future, and a myriad of other factors. It therefore requires taking a thoughtful assessment of your own needs, your alternatives, and the alternatives offered by vendors. 

Business Needs Assessment 

It begins with understanding your own business. Take a look at what is happening within your business now, what challenges are being faced, and what goals are being pursued. Which tasks are consuming most of your time? Where are most of your errors happening? Involving the most relevant business teams within your business from the earliest stages helps ensure that the ERP solution is supporting your business needs, rather than what sounds best on a whiteboard. 

Key Selection Criteria 

Now that your needs are identified, try to prioritize what really matters. Such factors may include usability, scalability, current tool integration, security, and overall cost of ownership. An ideal solution for your business should currently fit your needs but, at the same time, be adaptable enough to grow with your business in the future. 

Common Mistakes to Avoid 

Among the most frequent errors is making a choice on an ERP solution based on the price tag or brand name. Others would include underestimating the implementation time, training, or developing a solution that is unnecessarily complicated for your teams to work with. 

Takeaway: An ERP system, when selected carefully, can be more than a software solution; it can be a long-term partner in your business development.

Hire Automios for custom ERP development and implementation services. Contact us today!