How many types of ERP are there, and which management software should you choose?

The universe of management software, also known as ERP (Enterprise Resource Planning) software, is very broad and complex, and if you embark on the search for the ideal solution for you, you may feel overwhelmed by the possibilities you will find.

Today we tell you what types of ERP exist and what advantages and disadvantages you will find for each of them, so that you can make an informed decision and choose the solution that best suits your needs.

On-premise or in the cloud

When it comes to implementing management software in your business, this is one of the decisions you will have to consider. One classification when categorizing the types of ERP existing in the market is the modality, which is usually divided between on-premise and cloud mode.

What is the difference between on-premise and Cloud? The most important difference, and the one that you will perceive in your day-to-day work, is that on-premise solutions limit you to using the software on the computer or device where you have installed it, while the Cloud mode will allow you to access the program from anywhere using any device with Internet access.

The reason is that, when you opt for Cloud management software, your information is stored on your provider's Cloud servers and not on your own. Normally your provider will make daily backups of your data, so that, in case of security problems, this option will always be less vulnerable and will allow immediate recovery of your data at all times.

Assess your needs and those of your company. Do you need to be able to take your management software with you wherever you go? Would you like to be able to do business from home if necessary? Is the security of your information a priority for you? Then you probably need management software in the cloud.

Tailor-made or pre-designed

Companies of a certain size usually opt for customized management software, since it is the solution that offers the greatest adaptability and meets 100% of the needs of the business. This type of solution is developed according to the customer's needs and requirements.

The problem is that custom ERP software programming has a high cost that small and medium-sized companies usually cannot afford. In addition, finding the right company to develop it can be an arduous task, and the implementation and adaptation period can be quite long. In any case, if you have the budget and your company has particular needs, this is your option.

For those who are looking for a cheaper and faster implementation solution, there are solutions on the market that are already pre-designed to adapt to the common needs of companies, especially smaller companies.

These solutions are usually structured in modules that the user can add or remove according to his preferences. Sometimes, the fees will depend on the number of modules added, while other management software, such as Secre management software, makes all the program's functionalities available to all customers with a single fee.

Despite being a more generic solution, many of these software incorporate specific modules for very different sectors, as is the case of Secre, so unless you have very particular needs, it is very likely that you can find a generic solution that fits perfectly to what you are looking for and that meets your list of requirements.

Free or proprietary software

It is true that the number of open source ERP software is only a tiny fraction of the total market, but it is still an option that is within your reach and that you can consider. This solution can be interesting for companies with a large and experienced IT team, since it allows you to develop and integrate your own applications and modules to the management software.

If you have a good team of developers, this option will increase usability and will allow you to incorporate highly customizable and adaptable functionalities. A priori, this type of software is very economical, but keep in mind the large amount of time that your team will have to invest in them in case you want to develop modules to add to the ERP.

On the other hand, there are "private" or "proprietary" software, which do not allow access to their source code. It can only be modified by its developer(s). The vast majority of ERP solutions that you will find on the market work in this way, but it is also true that small and even medium-sized companies rarely have a specialized team that can dedicate itself to these tasks, and it is not common for their needs to be so particular that they require this type of programming.

Vertical or horizontal ERP software

We can also classify ERP types according to how they adapt to different sectors and business activities.

On the one hand, we have vertical ERP. This type of management software is designed for a specific business activity, so it incorporates features and functionalities that are specific to it. It is the ideal type of ERP for companies in sectors where business management has many peculiarities, such as the construction sector or the manufacturing sector.

Horizontal ERPs, on the other hand, incorporate much more general management features and utilities and can be used by businesses in all types of activities. They tend to be somewhat less expensive but, in exchange, they do not offer specialized tools for sectors or activities. They usually incorporate tools such as customer and supplier management, purchasing, sales, invoicing, finance, treasury, etc. They can be a good solution for SMEs whose management is relatively simple.

To recapitulate...

What types of ERP are there?

Management software or ERP can be classified in many ways, there is no standard way to do it. They can be classified by modality (local or Cloud), by adaptability (custom software or generic software) or by ownership (free or proprietary software).

Types of ERP: on-premise or cloud

On-premise ERPs are installed on office computers and can only be used there, while Cloud ERPs are hosted on online servers, allowing access from any device and any location, as long as you have an Internet connection.

Types of ERP: custom or generic

Custom ERP software is programmed according to the customer's needs and requirements. They offer the greatest adaptability, but they are extremely expensive solutions, so only large companies usually opt for them. Generic software is already pre-designed to adapt to the most common needs of companies, even offering solutions adapted to certain sectors. They are more economical solutions, perfectly valid for small and medium-sized companies.

Types of ERP: free or proprietary

Free or open source ERP (also known as open source) allows anyone to make changes to its code, making it an interesting option for companies with a team of programmers. Proprietary software does not allow access to its source code, which can only be modified by the developer. It is the most common option that we will find in the market.

Types of ERP: vertical or horizontal

Vertical ERPs are those that are designed exclusively for a specific business sector and, therefore, incorporate specific features for that activity. Horizontal ERPs are designed to be valid for all types of companies, so they take into account the common needs of most businesses but do not include sector-specific features.