How to select a Tier 2 ERP package

Companies that outgrow their small company accounting systems are challenged with finding a cost effective and robust ERP.  The Tier 1 ERP solutions provide fully functional ERP and reporting solutions across all industries. However, the associated costs may drive a company to look at Tier 2 options.  Investments by Tier 2 vendors over the past five years allow these applications to offer an attractive alternative by providing integrated solutions at a much lower total cost of ownership.

Selecting the right Tier 2 package is daunting given the number of alternatives available. How can a company be confident when determining which Tier 2 package will support a growing company? It is all about addressing key components of the Tier 2 alternatives:

• Chart of Accounts Structure. Companies implement new ERP systems to improve the quality and timeliness of information required to support the business. Capturing profitability across a variety of dimensions including geography, division, product or service line, and customer is critical. There are a few Tier 2 packages that support dimensionality and these solutions should be short listed when a company is considering implementing a new ERP.
• Intercompany Processing.  Accounting for thetransfer or sale of products and services in a complex legal entity structure can be difficult for many Tier 2 packages. Many fast growing companies have legal entity structures that result in intercompany transactions. These companies should only consider Tier 2 solutions that have automated intercompany processing capability.
• Foreign Exchange Support. Many high growth companies operate globally. Sales transactions can result in a product being sourced in USD but sold in local currency. Bills are generated and collected in local currency while profits are transferred to headquarters in USD. It sounds simple but few Tier 2 packages support this functionality without need for modification or third party solution.

• Configuration for Ease of Use. Tier 2 ERP solutions provide a variety of experiences for end-users. Some provide a ‘green screen’-like environment, while others take advantage of modern technology and provide a Windows type interface. Then a few Tier 2 ERP solutions have taken the middle ground, providing powerful tools to simplify transaction entry processing. The packages that have taken the middle ground can be easily configured to support company specific processes.

• Implementation Approach. The majority of Tier 2 implementation consultants take the ‘homework’ or ‘workbook’ model approach to installing and configuring software. The consultants leave and do not come back until the homework assignments are completed by the customer. This works well for very small simple companies. However, rapidly growing companies require more assistance to navigate the organization and leverage best practices from across the industry to determine the appropriate future state. Few Tier 2 ERP consultants are comfortable working in this environment and should be chosen carefully.
• Post Implementation Support. Tier 2 ERP solution providers vary in size and ability to provide post implementation support. Customers of smaller Tier 2 ERP solutions may have difficulty in obtaining support during critical outages. Selecting a service provider that has a sound financial position, invests in new functionality and offers the right level of post implementation support is critical for a successful implementation.

Selecting a Tier 2 service provider that has a sound financial position, invests in new functionality and offers the right level of post-implementation support is critical for a successful implementation.