In chapter three of our eight-chapter enterprise resource planning guide, we touched on the history of ERP. To summarize, ERP began in the 1960s as a way to better predict material requirements for products. In the 1990s, the term “ERP” was first coined, as the category grew beyond materials planning to become the central operating system for many enterprises.
Because ERP is now such a broad software category with multiple uses, it’s natural that subcategories and system types have been created. In this article, we’re using “system examples” and “categories” interchangeably to describe the grouping of ERP system types, not products. If you’re looking for specific ERP products and vendors, take a look at this article.
Use this post as a guide to home in on the type of ERP system your company might need based on your industry, company size, or deployment type.
ERP systems by industry
Some vendors offer ERP software specifically designed for certain industries, whereas others offer specific modules tailored to a certain industry.
There are benefits of selecting a product built for your industry. The system may work better within your regulatory environment, and the processes built into the system will likely be customized for your industry’s needs. On the downside, however, you may end up with a product that is harder to use or customize than an industry-agnostic ERP, and you may choose a vendor with fewer resources to improve the system over time.
Here are a few of the main industries that use ERP, each paired with an example product:
- Manufacturing. Infor CloudSuite Industrial is an example of a product built for manufacturing companies.
- Healthcare. Allscripts offers an ERP solution built specifically for hospitals and healthcare organizations.
- Construction. Penta offers ERP for construction companies and contractors.
There are two additional concepts to be aware of with ERP systems by industry:
- First, bigger companies like SAP, Oracle, Microsoft, and Infor will most likely have the largest market share within each industry.
- Second, those large ERP vendors tailor marketing messaging for each industry. They may even offer certain modules for specific industries.
But don’t be confused by their marketing messaging. On the whole, industry pages like this one from Oracle highlight the benefits and uses within specific industries, but the company actually offers just one product that can be used across industries.
ERP systems by company size
Another way to categorize ERP system types is by the size of the companies they target.
In chapter two of our enterprise resource planning guide, we use Gartner’s definitions of company size and will stick with those for this section. These terms are also the generally accepted ways to break up ERP products by company size.
- Small and medium-sized businesses (SMB). Syspro makes ERP software tailored for small businesses (fewer than 100 employees) in both functionality and price.
- Small and medium-sized enterprises (SME or mid-market). Microsoft Dynamics 365 Business Central is an ERP product built for companies with more than 100 and fewer than 1,000 employees.
- Large enterprises. Any of the bigger ERP players, like SAP and Oracle, build ERP systems for companies with more than 1,000 employees.
As you go up each level, functionality, complexity, and price all likely increase. In other words, a small business will pay a minimal amount for a few easy-to-use modules. In contrast, an enterprise will pay more for a product with robust functionality that can be used by hundreds or thousands of employees.
ERP systems by deployment
A third common way to categorize ERP systems is by the way they’re deployed. This comes down to a decision about where you want the software to be hosted and supported — on your own servers, on the vendor’s servers, or on a combination of the two. Each major ERP vendor will likely have an option for each type of deployment, so rather than providing example vendors for each, we’ll describe the categories themselves:
- On-premises. You buy the software, then install and run it on your servers and computers.
- Cloud. You buy a subscription to the software, which is stored on servers outside your company walls and delivered via the internet.
- Hybrid. This is a combination of on-premises and cloud software. Some functionality may be supported on your servers (on-premises), whereas other tools might be delivered over the internet (the cloud).
Additional ERP resources
Take a look at this guide to enterprise resource planning. If you’d like to learn more specifically about ERP implementation, take a look at this post. If you’re interested in learning more about popular products, take a look at this post about the best ERP software systems on the market today.