When looking for an ERP system, businesses face many of the same challenges. Whether you’re dealing with productivity issues or consolidating systems, ERP providers promise solutions. But how do you choose between Vertical and Horizontal options?
Here’s a quick look at what ERP is and how to decide between these two types of systems.
What is ERP?
ERP stands for Enterprise Resource Planning. It’s a system that integrates different business functions into one platform. With ERP, everything from sales to finance to inventory management is connected, giving you a real-time view of business performance.
A good ERP system can make operations quicker, improve efficiency, and provide access to important data.
The Role of Managed ERP Services
- Maintain system security and apply critical patches
- Train new staff as your team expands
- Optimize workflows as your business evolves
- Ensure business continuity during load shedding
- Manage upgrades and new feature rollouts
- Provide helpdesk support for end users across departments
- Add new modules or functionality as needs change
Vertical ERP: Industry-Specific Solutions
A Vertical ERP is designed for a specific industry. These solutions are built to handle the unique needs and processes of a particular sector. For instance, BlueCherry is an ERP for the fashion industry, offering tools like eCommerce, inventory management, and shop floor control.
The advantage of a Vertical ERP is that it’s specialized and requires little customization. But, these systems might lack flexibility and can be harder to integrate with other tools you use.
Things to think about with Vertical ERP:
- Does it connect easily with other systems?
- Can it work with tools like Excel or Outlook?
- Does it have the reporting power you need?
Horizontal ERP: Flexible, Broad Solutions
Horizontal ERP is more general. It serves a wide variety of industries with features that can be applied to different business types. Microsoft Dynamics 365, NetSuite, and Acumatica are examples of Horizontal ERP systems, which handle everything from finance to HR to inventory.
While Horizontal ERPs may not be tailored to one industry, they’re flexible. You can add on third-party tools to meet your specific needs.
Why Horizontal ERP?
- It works for many industries.
- It’s flexible and easy to scale.
- It integrates with other systems.
Which One is Right for Your Business?
If your business needs industry-specific tools, a Vertical ERP could be a good fit. But as your business grows, you might run into limitations with things like accounting and reporting.
A Horizontal ERP is more flexible and scalable. It can grow with your business and allows you to integrate the tools you need as things change.
Choosing between vertical and horizontal ERP systems is a strategic decision that impacts your operations for years. Consider these factors:
- Growth Plans: Where will your business be in 3-5 years? Will your ERP scale with you?
- Total Cost of Ownership: What are the real costs including licenses, support, integrations, and upgrades?
- Business Continuity: How does this solution handle load shedding and disaster recovery?
- Integration Needs: What other systems must connect to your ERP now and in the future?
- Support Quality: Does your implementation partner have proven experience in South Africa?
Industry-Specific Considerations
Manufacturing: Horizontal ERPs like Oracle offer advanced production planning, quality management, and supply chain optimization that vertical solutions struggle to match.
Distribution & Wholesale: Multi-warehouse inventory management and complex pricing structures work better on flexible horizontal platforms.
Professional Services: Project accounting, resource planning, and time tracking are standard in both, but horizontal ERPs offer better financial consolidation for multi-office firms.
Retail: While vertical retail ERPs offer specialized POS integration, horizontal systems provide better omnichannel capabilities and eCommerce integration.
Conclusion
Choosing between Vertical and Horizontal ERP depends on your industry and future needs. Vertical ERP is focused on one industry, while Horizontal ERP gives you broader functionality that can be adapted over time.
The right ERP system and the right partner are key to making sure you choose the best solution for your business.
