Teir 1 ERP solutions cost 340% more than Tier 2. (Management).

International corporations need to consider adopting a two-tiered approach to ERP solutions if they are going to successfully see real cost benefits and improved systems, in months rather than years. Independent research commissioned by Scala Business Solutions uncovers a huge disparity between the excessive cost of deploying a Tier 1 system globally, compared with the lower costs of a globally integrated two-tier strategy. The survey by Dennis Keeling identified that the key to lower costs was the ability to drive standardisation into the roll-out with a company-wide implementation template coupled with built-in localisation rather than ad-hoc customisations.

The typical implementation cost can vary from organisation to organisation dependent on their roll-out policy. However research shows the typical implementation cost of a Tier 1 system, such as SAP can cost between EUR15K to EUR3OK per seat for the complete deployment including hardware, software, consultancy and training. In comparison a Scala Tier 2 system can cost from EUR2K

EUR8K per seat.

The research was designed to gain a greater understanding of the costs associated with implementing an ERP system and the strategies enterprises should undertake to cost-effectively implement an ERP solution that meets the needs and requirements of business on a global basis.

The research establishes that Tier 1 systems can cope with the complex needs of centralised functions and huge number of users, however were not ideally suited to handling the less complex needs or localisation requirements of a branch or sales office in remote countries. This combined with the total cost of implementation and on-going support of Tier 1 systems verses the ability to keep local costs firmly in control by using local implementation partners with a Tier 2 system provides a strong case for a two-tiered strategy.

Comment:

Scala Business Solutions say; 'Corporations that initially approached ERP as a single tier strategy just haven't implemented a one-size fits all solution. The survey shows that organisations that have adopted a two-tiered strategy have successfully managed to implement their Tier 2 products quickly, even in the most remote countries. At the same time they still achieved the control and standardisation they originally aimed for with a single tier solution."

The main reasons for this dual strategy were:

* Cost of implementation of Tier 1 solutions due to their complexity

* Cost of deployment and support of Tier I solutions

* Availability of the technical infrastructure in Third World countries

* Stand-alone solutions are more suitable than a centralised solution for the medium-sized, smaller operation

* Localised solutions easier to implement in some countries than configuring a centralised solution

* Standardising on two vendors allow effective application integration in a centralised strategy.

With the negative awareness of failed projects, expensive implementations and customer dissatisfaction, we were keen to prove that a new strategic approach to ERIP could successfully deliver on the ERP dream of integrated IT systems," said Topping. www.scalasystems.com