Horizontal or vertical ERP: what needs your business?

Traditionally, companies were implementing a generalist ERP and then did custom development to include specific functions.However, increasingly exist in the vertical or specialized ERP market. What advantages and disadvantages of each option?

Since the appearance of the first ERP after the Second World War, there has been tremendous growth in the supply of providers and programs to manage corporate resources.

On the one hand we have the largest manufacturers of ERP : SAP , Oracle and Microsoft , with its various products; on the other hand, providers of ERP booming as Epicor , Lawson , Infor10 , etc. These developers addERP for SMEs ( SAGE , A3 , Exact ) companies ERP regional ( Solmicro ,Aqua eSolutions , etc.) and ERP software free (eg adaxa , Fedena or OpenBravo). The result? Hundreds of options to choose ERP for our company.

How can narrow your search to a more manageable number of possibilities? In previous articles we have discussed some useful criteria such as choosing between an ERP standard or custom . Now we will focus on another alternative that is equally important: go for a ERP landscape (which includes the usual basic functions in most companies) or ERP vertically (with specialized functions for a sector). Choose correctly can save a lot of time and money in settings.

ERP Horizontal vs ERP Vertical

First, we will look in more detail the differences between ERP and horizontally ERP vertical, and their main advantages and disadvantages. In the final part, we will give some tips that may be helpful in making a decision.

An ERP Horizontal (also known as ERP general or ERP generalist) is an enterprise resource planner software designed to perform the functions of typical management of any company such as accounting, billing, purchasing and sales, inventory, human resources, etc. You can use almost all companies, which is why most of the products ERP on the market that falls into this category. This amount and variety of provision also allows license prices are generally more affordable and faster implementation, relying on highly standardized modules. Moreover, competition between major manufacturers of ERP general makes innovation in this sector is faster due to the investments made ​​by these firms.

However, an ERP generalist can hardly reflect the specific processes of the activity of the company. Can be incorporated by developments customize the solution, but this triggers the cost of implementing the ERP and may also invalidate the support offered by the manufacturer of the ERP general. The result is often some of the most important business processes continue to be made ​​outside the scheduler software enterprise resource so much time and money has cost, which means giving up the main advantages of ERP .

Meanwhile an ERP Vertical (also called ERP specialized or ERP ) is a management program specifically designed for enterprise resource sector or niche. This allows for special features not usually available in the ERP horizontal. Consider a couple of examples: An ERP for construction industry includes tracking tools work plans; while an ERP for the wine industry can handle weather data, analysis of samples, etc. This specialization prevents developments as to adapt the solution to the business processes and allows you to work more efficiently, as the ERP speak the same language as the company. Of course, ERP vertical include common modules such as management, finance, procurement, etc.

The disadvantages of the ERP include the vertically that the available supply is reduced, the cost of licenses is often superior to those of an ERP horizontal, and maintenance and support can also be more expensive, to be unique to the company that develops ERP . Furthermore, often features specialized modules are inflexible to adapt to how the company that uses it works. On the other hand, large manufacturers often do not develop ERP niche, so that these products are usually offered by companies with more modest resources for R & D and more limited support.


Tips for choosing an ERP horizontal or vertical

Once you view the advantages and disadvantages of ERP general and ERP specialist, to make a decision should take into account the following aspects:

  • To what extent the company specializes or has a management different from the rest?
  • Are there specific vertical market solutions for our industry?
  • What experience and customer base credited solutions ERP vertical?
  • What kind of ERP use our competition? Do we want to imitate or differentiate?
  • What is the most important process or area for the company: production, logistics, design ?
  • What processes or areas management deficiencies or bottlenecks occur?
  • Does the planned one ERP general area that we identified as most important / poor?
  • Can the company afford the time and cost of adapting an ERP generalist?
  • How fast changing needs of the company? Will evolve ERP with them?

In any case, the boundaries between ERP horizontal and ERP verticals are blurring. Given the saturation of supply management software generalist, large manufacturers are betting on creating vertical zed solutions to differentiate and target specific market segments. For example, SAP already has versions of its ERP  for 25 sectors. In addition, ERP modern are more flexible: the basic solution can answer 75% of the needs of a company and the remaining 25% of specialized requirements can be met with a not very complex parameterization. Finally, many companies are specializing in tailor ERP horizontal to vertical sectors, which allows you to enjoy the advantages of both options at once. So ideally, first check if there is an ERP generalist who can cover most of the needs of the company and what cost would include the rest; and if the cost is too high, valuing the option to implement software ERP.

Your company uses a generalist or specialist ERP? What?

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