Two-Tier ERP: Embrace the Cloud Faster

Someday, all business will run in the cloud. That's the vision NetSuite was founded on, and that's the reality we have worked to help our customers achieve. Today, things are a little more complicated, which is why a growing number of larger companies are taking a two-tier approach to cloud ERP. In a typical two-tier ERP arrangement, one level of the business continues to run an incumbent ERP product while new lines of business, acquisitions, or new locations employ a modern, cloud ERP solution. This "hub-and-spoke" model enables large enterprises to start benefiting from cloud solutions immediately in subsidiaries, divisions and business units without disrupting business as usual at headquarters.

The two-tier approach is also more practical for extremely large companies, which can struggle with the problems of gaining organization-wide buy-in into any major project. In some enterprises, legacy ERP systems are so deeply entrenched that digging out from under them takes time. In others, the cost of extending the architecture to emerging markets or industries far outweighs any single-architecture benefits. Simply put, these companies are content for the medium-term with the capex and maintenance cost of their big-iron ERP, but shy away from adding further to those costs by deploying still more servers and VPNs in new offices.

Although a two-tier ERP architecture can be created with any combination of systems, the cloud excels in a two-tier structure because of the inherent advantages of rapid and scalable deployment. NetSuite OneWorld has been a popular two-tier component for years, allowing CIOs to support corporate growth in a flexible and cost-effective manner. The multi-subsidiary, multicurrency consolidation offered by NetSuite OneWorld gives controllers and executives comprehensive and real-time insights into the entire range of business activities running on that tier, and pre-built financial consolidation modules for popular, conventional ERP systems make it easy to roll up results in a timely and consistent fashion.

For example, Land O’Lakes adopted NetSuite OneWorld as a two-tier deployment for supporting the global business expansion. While the corporate headquarters is utilizing Oracle's® JD Edwards EnterpriseOne as its core ERP platform, Land O'Lakes selected NetSuite OneWorld for a number of subsidiaries and joint ventures in the United States, Mexico, and China and plans to use NetSuite OneWorld to standardize on a multi-national, multi-currency ERP solution for its domestic and international subsidiaries, and joint ventures. Land O'Lakes turned to NetSuite OneWorld as a two-tier approach to augment its existing corporate software investments in JD Edwards EnterpriseOne.

A true two-tier architecture also prevents companies from falling into a familiar trap—relying on entry-level or regional, boutique accounting packages to support new business opportunities. These approaches minimize up-front investment by avoiding the extension of the "big iron" ERP system by virtually guaranteeing a costly, time-consuming rip-and-replace process when the division outgrows the constraints of the small-time system. That's why building a two-tier ERP approach around a solution with unlimited scalability and world-class capabilities is so important.

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