Why is the Two-Tier ERP strategy of SAP so attractive for companies and why even manufacturing companies will find the SAP Public Cloud interesting

SAP’s Two-Tier ERP strategy is a strategic framework that enables companies to combine their existing ERP system, usually deployed at the corporate level (tier 1), together with a secondary SAP system (tier 2). The latter is used in subsidiaries or smaller locations. This gives companies the flexibility to maintain a central core system while subsidiaries or smaller business units can work with a separate, localised SAP solution.

Improved agility and scalability

When companies implement SAP’s Two-Tier ERP strategy, they can achieve greater agility and scalability within their organisational structure. The decentralised systems of the subsidiaries enable the individual units to quickly adapt and respond to local market conditions, legal requirements and specific business processes, which in turn significantly shortens the time-to-market phase. This flexibility increases agility and enables the subsidiaries to implement changes quickly, thus ensuring the continuity and competitiveness of the company.

Location-specific customisation options

Companies with global operations often have to take into account different business practices and legal requirements depending on the specific location. SAP’s Two-Tier ERP strategy enables subsidiaries to adapt their SAP system to specific regional requirements, for example, in terms of taxes, reporting standards and local language(s). This customisation minimises the complexity of operations and supports companies in their regulatory compliance in order to ensure smooth operations in different markets.

Attractive pricing system

The two-step approach offers significant cost benefits by reducing the complexity and infrastructure requirements of a single global ERP implementation. This approach allows for a smaller, more focused system for subsidiaries, instead of implementing and maintaining a large, centralised ERP system for the entire company. This localisation reduces licensing costs, infrastructure expenses and ongoing maintenance, resulting in overall cost optimisation. For the smaller locations (tier 2), the company only pays for the functions that are actually used, as the multitude of possibilities of tier 1, the main location, is usually not needed there.

Faster implementation and lower risk levels

Implementing a large ERP system across an entire company is a complex undertaking and there are many potential risks. SAP’s Two-Tier ERP strategy reduces these risks by enabling subsidiaries to implement a localised SAP solution in less time. This streamlined implementation process shortens the overall project duration and minimises disruption to the core business. In addition, it is possible to perform the launch in phases, which facilitates the identification and resolution of potential problems or challenges while reducing the risks of implementation.

Centralised data management

Each subsidiary can operate with its own localised SAP system, while data integration and consolidation remain critical for effective decision-making at the group level. SAP’s Two-Tier ERP strategy ensures a seamless flow of data between the systems used by the subsidiaries as well as the group and allows real-time insights into the activities of the subsidiaries. This centralised data management enables companies to make informed decisions based on accurate and up-to-date information. It fosters a company-wide approach to transparency and coordination.

Customers know their needs

The advantages mentioned make SAP’s Two-Tier ERP strategy very attractive for companies. It is exciting to observe that our customers now explicitly ask for this strategy and recognise the added value it provides. We could have never imagined that two years ago. But with the shift towards the public cloud, the awareness and even the knowledge of the advantages of such a strategy has grown in many companies.

Unlike other consulting firms, we do not specialise in one product, but rather we consider the IT architecture and strategy of the respective customer in order to then offer them the appropriate solution. Recently, SAP itself emphasised that it is difficult to find reliable partners on the market who have sound experience with public cloud projects. However, it is precisely this expertise and experience that we have built up, not least through our own SAP transformation. This is unique in Germany and a great advantage for us.

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