The Best Types of ERP Systems for You: Benefits & Examples

Simon Litt

Last updated on Feb 10, 2025

QUICK SUMMARY

ERP systems, while generally expensive, are regarded as efficiency-driving powerhouses... but one size doesn't fit all. These are the different types you'll find on the market.

TABLE OF CONTENTS What Is an ERP System? Types of ERPs Best Use Cases Benefits By Industry Common Features Choosing the Right ERP

Picking the right ERP system can make a CFO’s life a whole lot easier, from streamlining operations to improving financial control and keeping everything running smoothly. But with so many types of ERP out there (i.e. cloud, on-premise, industry-specific), it’s tough to know which one fits your business best.

Having worked in fintech and digital software, I’ve seen how the right ERP can transform a company—and how the wrong one can cause endless headaches. Some are built for fast-growing businesses, while others cater to specific industries. Knowing the difference is key.

This guide breaks down the main ERP types so you can quickly find the best ERP software for your team. Whether you’re upgrading, switching, or just exploring, you’ll get clear, no-fluff insights to help you make the right choice.

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What is an ERP System?

An enterprise resource planning system (ERP) is a form of business management software that can help streamline processes, support simpler communication, increase productivity, and more.

ERPs operate as a single-source system of integrated centralized applications. They include everything your company’s departments require to run, manage, and automate processes.

Although your whole company can benefit from implementing one of these systems, the departments that will see the most benefit from ERP implementation include:

Accounting & Finance
Human Resources
Sales
Customer Support
Inventory Control

With a comprehensive ERP system, you can eliminate isolated software, such as your standalone customer relationship management (CRM) system, financial management system, or inventory management system.

All of these systems are found within the ERP - but with the added benefit of being connected and centralized into a single platform.

Author's Tip

If you want to dive deeper, you can check out my comprehensive article describing ERP systems and how they work.

ERP Systems Overview

Using an ERP system can help every business on multiple levels. But, not all ERP systems are created equally.

If you’ve ever shopped for organizational or operational software for your business, you know these things tend to come in several variations, all with different components to suit the needs of different businesses. In terms of ERP systems, there are four primary system types you could choose from:

Out-of-the-Box ERPs: These systems are very easy to use, making them beginner-friendly. They’re also easy to install, but they lack the customizations and configuration options of more complex systems. They're considered out-of-the-box because they’re pre-built and ready to use. All you have to do to get started is download and input your company’s information.
Customizable ERPs: Also known as Tier 1 ERPs (SAP, Microsoft Dynamics 365, and Oracle), these systems are developed from a framework designed or identified by your company. This makes them one of those most customizable options, but the trade-off is that these are pricey and might take some training to use. To create your customized business functions, large-scale ERPs require many hours of development and consultation.
Intermediate ERPs: Also known as Tier 2 ERPs, these systems fall somewhere between the first two options. While your company can use intermediate ERPs out of the box, they also offer a lot of customization and configuration options. If you’re looking for something that will fit your exact needs without breaking the bank, this is a solid system-type choice. This is generally the best option for small businesses.
Industry-Specific ERP: Our last system type is those built for specific industries, like food and beverage, professional services, or construction. To use this type of ERP system, you’ll need to be familiar with industry terms, standards, policies, and procedures.

It’s important to note you won’t always see enterprise resource planning systems marketed as one of these system types. However, the brief explanations above should help you clearly identify the types of available systems and which type is best for your company.

Types of ERP

Of course, when you’re determining the type of enterprise resource planning software that will work best for your company, you need to look at more than the system; you’ll also want to identify your ideal hosting type during your selection process.

While system types are more nuanced and not often advertised, hosting types are commonly understood and marketed by ERP providers. The most prevalent hosting types are:

Cloud-Based ERP

A cloud-based ERP is hosted on your ERP vendor’s servers, which you then access via the internet. Generally, these are software-as-a-service (SaaS) solutions that have a subscription-based price point, where you pay a flat pre-determined rate every month, quarter, or year.

The benefits of using a cloud-based ERP include:

Relative affordability
An easy-to-calculate comprehensive price
Quicker implementation
No need for in-house IT specialists to maintain the system

The downsides of using a cloud-based ERP include:

Restricted system control
Limited customization compared to on-premises ERP options
Data security out of your direct control

Multi-Cloud ERP

Similar to cloud-based ERPs, multi-cloud ERPs use several third-party cloud applications and services to run your system. These can public or not.

The benefits of using a multi-cloud ERP include:

Allows users to add functionality with multiple cloud-based solutions
Provides one central system for login options
Allows integration with public cloud resources to expand system capabilities and performance

The downsides of using a multi-cloud ERP include:

Requires additional IT staff
May be riskier than other ERP types (cybersecurity threats and possible sever down time)
Can be more expensive

On-Premises ERP

An on-premises ERP is hosted on your organization’s computers and servers. It can be accessed through any connected computer and can sometimes be accessed remotely, depending on how the ERP is set up.

The benefits of using an on-premises ERP include:

Full system control
Full customization and configuration options
Data security in your direct control

The downsides of using an on-premises ERP include:

Very large upfront cost
Higher ongoing costs, as you’ll need in-house IT professionals to perform your own maintenance
Not every company has the technology or bandwidth to host an on-premises ERP

Hybrid ERP

Finding a hybrid ERP may be harder than the other two options. But, as the name suggests, this hosting type combines aspects of a cloud-based ERP and an on-premises ERP.

The benefits of using a hybrid ERP include:

The ability to upgrade legacy systems more easily
Don't require company-owned servers
Offers more control over system features

The downsides of using a hybrid ERP include:

Less flexibility than cloud-based options
Requires more IT department involvement

Use Cases of ERP Software

There are many uses for ERP software, but you may find it helpful to have it broken down to see how each modular is best used. We’ve broken down the primary use cases of ERP software below so you can ensure the one you choose addresses your company’s specific needs.

Inventory Management: Track, update, and troubleshoot your inventory. You can also make this process less time-consuming by looking for an ERP that integrates purchasing capabilities, too.
Software Licensing: Level up your procurement capabilities by centralizing everything from vendors to accounts payable in a single platform.
Sales and Marketing: Sales reps can use an ERP to turn quotes into sales orders within minutes. By integrating sales and marketing together, you get a more comprehensive picture of what works (and perhaps more importantly, what doesn’t).
Financial Management: Manage all financial aspects from one platform to increase productivity and receive a more comprehensive overview of your company’s financial health.
Customer Relationship Management: Use an ERP to track customer information and customize marketing efforts. Plus, tie your customer service options directly into customer portals for increased efficiency.
Supply Chain Management: Better organize your purchase orders and monitor current production efforts. An ERP can help you decrease the risks of running out of what you need, so you always have what your customers want.
Human Resources Management: Effectively manage all your human resources, manage company policies, and help uphold the company culture within the ERP.
Project Management: Manage projects by assigning tasks, tracking expenses, and overseeing progress within the ERP. Plus, run detailed data reports at every stage of your project to ensure efficiency - and address problem areas quickly.

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Industries That Most Benefit From Using ERP Software

Many industries can benefit from using an ERP - and operators are quickly learning that. The proof? Allied Marketing Research predicts that the global ERP market is going to be worth more than $117 billion by 2030.

However, while virtually all companies in all industries can benefit, there are a few industries that benefit the most. Thanks to this, these are also the industries that you’ll most often find using an enterprise resource planning system. These industries include:

Technology & SaaS
E-Commerce
Construction
Food & Beverage
Healthcare
Manufacturing

Common Features of ERP Software

Although the features and capabilities of ERP software can vary significantly from one option to the next, there are a set of common features (called modules) that all the best options have. These include:

Accounting

Some believe accounting to be the true core of ERP software as it benefits most from centralization due to the ability to create high-level, detailed company-wide reports.

A few accounting features found on ERP software include invoicing, financial report generation, budgeting, data aggregation (goodbye rogue spreadsheets), and general finance capabilities.

Website/E-Commerce

Most ERP software has features that allow you to design, configure, and host your website directly from your system. This makes things like online payments, order processing, and designing or maintaining a customer portal simpler.

Project Management

Although most ERP systems have project management capabilities, the features for this can vary widely. Most systems include timesheets and task management; however, more robust systems might also include procurement, resource management, order management, cost estimations, and project reports or overviews.

Customer Service

An ERP should provide all the fundamental features of a customer relationship management system (CRM). For example, ERPs generally offer live chat, customizable surveys, customer data tracking, and a help desk.

Together, these features can streamline customer service business operations, reduce call waiting times, and generally optimize the customer experience.

Human Resources

This module is designed with features to handle all of the most important tasks of HR. For example, an ERP may include performance reviews, payroll, recruitment features, expense reports, and leave or time-off tracking.

General Operations

One of the most significant benefits of ERP software is that it allows you to centralize all your operations into a single platform.

Due to this, you can track and manage general operations you wouldn’t normally find in other collaborative software solutions, such as procurement, supply chain management, profitability tracking, inventory management, and more.

Workflow Automation

Automation features for various workflows across departments can decrease time spent on tedious or routine tasks, such as data aggregation for financial report preparation.

Author's Tip

This is a significant feature to look for in an ERP. An ERP that can successfully streamline workflows will not only make your life easier, but can also increase employee satisfaction and possible revenue.

Analytics and Reporting

The analytics and reporting features available in an ERP are more powerful because they encompass the company as a whole, versus being department or project-specific.

This can help improve decision-making capabilities and provide a clear definition of necessary business requirements moving forward.

If possible, look for real-time data options for even more powerful decision-making abilities.

Tips for Choosing the Right ERP System

Now that you have an in-depth understanding of the types of ERP systems your company could use, it's time to find the right ERP system for you. Consider the following questions when choosing your ERP type and software.

What are your specific business needs? Can the chosen software and type scale with your company?
Will you require an implementation partner to help your ERP take off on time and budget?
What risks are associated with each type and how can you mitigate them?
What level of customization is possible with each deployment option?
How does each deployment model impact costs, maintenance, and accessibility?
How much training is required for different user levels?

If you're still stuck after asking yourself these questions, take a look at some of my top ERP software options to help you get started.

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