Running a construction business means juggling multiple systems and databases. This can be challenging without an ERP system. Especially when teams use separate tools for accounting, inventory, and project management, it creates data silos. Team members waste time manually transferring information between systems, increasing the risk of data entry errors and making real time reporting nearly impossible.
Enterprise Resource Planning (ERP systems) integrate these elements into one cohesive platform, streamlining everything from accounting to inventory management.
With such powerful potential, it's clear why more than 70% of large enterprises use ERP software.
The impact of these systems on business processes has made them essential for modern enterprises looking to automate processes and gain real time operational insights. Selecting the right ERP system means finding a solution that fits your specific needs. Different types of ERP systems serve various business requirements, and choosing the wrong one could lead to costly implementation challenges.
In this article, we'll guide you through the main types of ERP systems, helping you make an informed decision based on your organization's needs and capabilities.
Key Types of ERP Systems
Your choice of ERP system will determine how effectively you can manage business processes and ensure efficient supply chain management. To make the right decision, evaluate these key types of ERP systems against your specific needs and business objectives. It’s important to remember that an enterprise resource planning platform serves as a unified source of truth for organizations aiming to improve efficiency and decision making.
1. Cloud based ERP System
Cloud based ERP runs on the provider's servers, not yours. You access it through the internet and pay a subscription fee. The provider handles all maintenance, updates, and security.
Most contractors choose cloud based ERP because of its lower startup costs and simple scaling. You get regular updates automatically, and it connects easily with other construction ERP software. The biggest advantage is that you can access your data from any job site in real time — no complex IT infrastructure needed. Just log in and get to work with an integrated ERP system software that supports supply chain management and key processes like accounts payable.
Best for
Small to medium-sized businesses, startups, and companies with remote workforces.
2. On-Premise ERP System
On-premise ERP systems run right on your company's own servers and computers. You maintain full control over your ERP system, from security protocols to customization options. Instead of monthly fees, you pay once for the license and own it outright. Since everything's local, you don't depend on the internet connection, and your team has direct access to data whenever they need it in real time.
The main difference from cloud ERP is that you're in charge of everything, from maintenance to upgrades. While this means more responsibility, it also gives you complete freedom to tailor the ERP software to your specific needs.
Best for
Large enterprises with specific security requirements, companies in highly regulated industries, or businesses requiring extensive customization.
By the way, FirstBit ERP is available both as a cloud based solution and on-premises installation, giving you the freedom to choose what works best for your business processes.
It combines ERP integrated software with features like self-service, relationship management, supply chain management, and accounts payable automation. This makes it a strong source of truth for compliance and operational excellence.
It combines ERP integrated software with features like self-service, relationship management, supply chain management, and accounts payable automation. This makes it a strong source of truth for compliance and operational excellence.
3. Hybrid ERP System
Hybrid ERP combines cloud ERP and on-premise solutions to give you flexible control over your business data. You keep sensitive information on your servers while running other functions in the cloud ERP. Cloud based ERP model also supports supply chain management and aligns with modern enterprise resource planning practices. This setup works well for growing businesses that want both security and accessibility.
You can choose which parts of your ERP system stay local and which move to the cloud based setup — like keeping financials on your servers while managing projects online. It's also an effective way to move to the cloud ERP step by step, without disrupting your current operations. Have specific departments with different security needs?
Hybrid ERP lets you adjust the setup for each team while maintaining one connected system. It acts as a source of truth for your business needs and supports accurate decision making.
Hybrid deployments also simplify regulatory compliance while allowing integration with ERP integrated software modules such as accounts payable, relationship management, and self service portals. This helps streamline everyday tasks.
Hybrid ERP lets you adjust the setup for each team while maintaining one connected system. It acts as a source of truth for your business needs and supports accurate decision making.
Hybrid deployments also simplify regulatory compliance while allowing integration with ERP integrated software modules such as accounts payable, relationship management, and self service portals. This helps streamline everyday tasks.
Best for
Mid to large-sized organizations seeking flexibility, companies with varying security requirements for different departments, or businesses planning a gradual transition to the cloud ERP.
Other Types of ERP Software
Each one of the types of ERP systems serves different business needs, so understanding their practical benefits will save you time and resources in the long run. Choosing the right enterprise resource planning platform ensures your company has a reliable source of truth that supports supply chain management and effective decision making.
Custom vs. Ready-Made Solutions in ERP Systems
Custom ERP systems are developed specifically for your business processes. They align with enterprise resource planning strategies and provide organizations with advanced management tools for streamlining operations. They offer complete control over functionality and serve as a single source of accurate data for better decision making.
Custom ERP systems also match your exact processes and workflows, offering complete control over functionality. While development takes longer and costs more initially, custom ERPs can provide precise solutions for unique business requirements. This option is particularly valuable for organizations with specialized processes or complex supply chains that standard ERP software cannot effectively manage.
Custom ERP systems also match your exact processes and workflows, offering complete control over functionality. While development takes longer and costs more initially, custom ERPs can provide precise solutions for unique business requirements. This option is particularly valuable for organizations with specialized processes or complex supply chains that standard ERP software cannot effectively manage.
Ready-made ERP systems offer proven solutions that you can implement quickly. They come with standard features, regular updates, and established support systems. Most small and medium-sized businesses find these ERP systems sufficient for their operations, especially when beginning their digital transformation.
Ready-made ERP systems support chain supply optimization while acting as a single source of truth for key reports. They stand out due to the robust enterprise resource planning features and integrated relationship management tools. The lower cost and faster implementation make them an attractive choice for companies looking to standardize their business processes.
Ready-made ERP systems support chain supply optimization while acting as a single source of truth for key reports. They stand out due to the robust enterprise resource planning features and integrated relationship management tools. The lower cost and faster implementation make them an attractive choice for companies looking to standardize their business processes.
Generic vs. Industry-Specific ERP System
The generic ERP system comes with standard business modules that work across different industries — it costs less and can handle common business processes through basic configuration.
An industry-specific ERP system, on the other hand, is built for particular sectors with specialized features — like production planning for manufacturing or supply chain management.
The right choice between these ERP systems depends on your company's specific needs, budget, and operational complexity. If you run a construction business with standard business processes, a generic ERP system might be sufficient, while a manufacturing company with complex production cycles would benefit more from an industry-specific solution.
Open-Source vs. Proprietary ERP System
When considering ERP software, you'll need to decide between open-source and proprietary ERP systems. Open-source ERP software gives you complete freedom to modify the system in real time — perfect if you need unique features or want to integrate specific local regulations into your workflow.
However, you'll need a skilled technical team or a third party partner. So you should budget for development, security, and ongoing maintenance.
However, you'll need a skilled technical team or a third party partner. So you should budget for development, security, and ongoing maintenance.
Proprietary ERP software, while requiring licensing fees, delivers a professionally managed solution with regular updates and reliable support. You'll get standardized features, pre-built integrations, and dedicated customer service — ideal if you want a reliable, ready-to-use ERP system without maintaining an internal development team.
Consider starting with an ERP software that meets your current needs while allowing for future growth and adaptation.
Gain full control of your business
Get a 360° project view with FirstBit ERP
Request a demo
10 Steps to Choose Right Type of ERP System
Finding the perfect ERP system among many types of erp systems can feel overwhelming with so many options available. Here's your roadmap to making the right choice of ERP software.
1. Assess Your Business Needs and Goals
Start with a company-wide audit of your current business processes. Gather your team leaders for a focused workshop where each department maps out their daily workflows and pain points. Have them track time spent on routine tasks over two weeks — this will reveal exactly where efficiency breaks down.
For instance, if your warehouse team spends hours reconciling inventory counts with purchase orders, note this as a priority area for automation, using the ERP system.
2. Evaluate ERP Features and Functionalities
Instead of getting lost in feature lists, focus on solving your specific challenges. Sit down with your team and create a simple "must-have" vs "nice-to-have" list. If you're in manufacturing, spend time in your production area observing workflow bottlenecks in real time.
Watch how information flows between departments — where does it get stuck? These observations will guide your feature requirements for the ERP software. They will do it even more effectively than any vendor checklist.
3. Consider Scalability and Future Growth
Think beyond your current size. A system that works for 50 employees might struggle with 200. When evaluating options, look for types of ERP systems that can handle increased transaction volumes, additional users, and new business processes without major upgrades.
Your growth plans should guide this decision — whether you're planning to expand internationally or add new product lines, your ERP system should be ready to support these moves and integrate supply chain operations.
4. Compare Cloud ERP vs. On-Premise ERP Solutions
Your deployment choice significantly impacts both short and long-term success. Cloud based ERP and cloud ERP solutions offer quick implementation and automatic updates without heavy IT overhead, typically charging a predictable monthly fee. A key benefit of cloud ERP is the ability to access critical data securely from any location, making it especially valuable for distributed teams and project-based businesses.
However, watch for hidden costs like additional user licenses, storage upgrades, or premium support packages that can add up quickly with cloud ERP subscriptions. At the same time, cloud ERP platforms are continuously updated, ensuring that your business always benefits from the latest features, security patches, and compliance tools without added effort from your IT team.
However, watch for hidden costs like additional user licenses, storage upgrades, or premium support packages that can add up quickly with cloud ERP subscriptions. At the same time, cloud ERP platforms are continuously updated, ensuring that your business always benefits from the latest features, security patches, and compliance tools without added effort from your IT team.
On-premise solutions require substantial upfront investment in hardware and licenses, plus ongoing maintenance costs. While they give you complete control over your data and customizations, you'll need to budget for IT staff, security measures, and periodic hardware updates. This is different from the predictable subscription model of cloud ERP. Before deciding, calculate your total cost of ownership over at least five years — the initial price tag rarely tells the whole story.
5. Check Vendor Reputation and Support Services
A great ERP system needs an equally great vendor behind it. Look beyond attractive sales pitches and dig into their track record. Talk to current customers in your industry about response times, support quality, and implementation experience. Many vendors of ERP software emphasize reliability, but evaluating their ability to handle real time updates and complex supply chain integrations is essential.
Does the vendor provide 24/7 support? Are there extra charges for priority assistance? Pay special attention to how they handle updates and critical issues — you'll want a partner who's there when you really need them. It’s important for you whether you’re running cloud ERP, on-premises, or hybrid solutions.
6. Analyze Integration and Customization Options
Your ERP system needs to play well with other third party software you're already using. Think about all the tools your team relies on daily — from accounting systems to online stores to email. Make sure your new ERP system can smoothly connect with these essential tools. For example, when your construction team updates material usage on a job site, you want that information to automatically sync with your inventory, supply chain, and purchasing systems without manual data entry.
Consider your unique business processes too — like how you process refunds or approve large purchases. Look for types of ERP systems that let you adjust these workflows through simple settings rather than requiring expensive custom programming.
Remember:
The more custom development you need, the more complicated and costly your future ERP system updates will be. But it can be worth it. Vendors that provide flexible ERP software help businesses manage complex business processes and real time decision-making more efficiently.
7. Review Cost, ROI, and Budget Constraints
Don't just look at the price tag — dig deeper into real implementation costs. Set up meetings with your finance team to break down both obvious and hidden expenses.
The investment can pay off quickly, as approximately 28% of companies report experiencing a positive Return on Investment (ROI) within the first year of implementing an ERP system. [?]
To validate these potential returns, ask vendors for detailed case studies showing ROI timelines from similar businesses. You should also find out how cloud ERP has reduced costs compared to traditional models.
Most importantly, get everything in writing — from training costs to custom development fees. Experienced vendors of ERP software should be able to provide a comprehensive cost breakdown. This includes real examples of how their ERP system reduced costs for other clients through better real time decision-making, optimized supply chain processes, and integrations with third party tools.
8. Request Demos and Conduct Trial Runs
Ask for detailed demonstrations that show how the ERP system handles your daily tasks. Include team members from different departments in these sessions — they'll notice potential problems you might miss. If possible, try out a test version where your team can practice real work scenarios. Pay attention to how easy the ERP software is to use and how well it performs during actual tasks.
9. Ensure Compliance and Security Standards
Your ERP system must meet industry regulations and protect sensitive data. Check if the ERP software follows required security protocols and can generate compliance reports. Consider data backup procedures, user access controls, and encryption methods. Make sure the ERP system can adapt to new regulations as they emerge.
This includes integration with third party tools that safeguard the supply chain. Remember, security breaches can be costly both financially and for your reputation. If you have real time monitoring features built into cloud ERP, this strengthens oversight of your business and reduces risks.
This includes integration with third party tools that safeguard the supply chain. Remember, security breaches can be costly both financially and for your reputation. If you have real time monitoring features built into cloud ERP, this strengthens oversight of your business and reduces risks.
10. Make an Informed Decision with Stakeholders
Bring together key decision-makers from across your organization. Each department should voice its needs and concerns, especially regarding critical business processes and the reliability of the supply chain. Compare your top ERP systems using a scoring system based on your must-have features and nice-to-have additions.
The most effective approach is to consider multiple types of ERP systems and select the type of ERP that balances cost, security, and flexibility. Consider both immediate needs and long-term goals. Document your decision-making process — it will help justify the investment and guide implementation.
The most effective approach is to consider multiple types of ERP systems and select the type of ERP that balances cost, security, and flexibility. Consider both immediate needs and long-term goals. Document your decision-making process — it will help justify the investment and guide implementation.
Why Choose FirstBit for Your Business?
A well-designed ERP system must effectively address the complexities of regional business operations in the UAE. This includes essential features such as multi-currency support for international transactions, Arabic language interface for local users, and built-in compliance with UAE tax regulations and reporting requirements. Integration with supply chain management tools and real time reporting ensures your business processes stay aligned with industry demands.
Main menu in FirstBit ERP system
FirstBit ERP software delivers all these critical functionalities while offering the flexibility of both cloud based and on-premises deployment options. Backed by a team of local experts who understand both technical requirements and regional business practices, FirstBit ensures a seamless transition to your new ERP system, helping you achieve operational excellence while maintaining compliance with local regulations.
Compared to other types of ERP systems, firstbit balances scalability, security, and adaptability, while also reducing dependence on third party add-ons.
Compared to other types of ERP systems, firstbit balances scalability, security, and adaptability, while also reducing dependence on third party add-ons.
Explore efficient ERP solutions for your construction business
Request a demo
Key Takeaways
-
Small businesses. Cloud based ERP systems offer the best value with low upfront costs and easy maintenance. These solutions are especially effective when paired with real time data tracking for better decision-making.
-
Medium-sized companies. Hybrid solutions provide an ideal balance of control and flexibility. Many choose a cloud ERP combined with on-premise setups. The reason: it will integrate better with existing supply chain workflows and reduce dependency on third party customizations.
-
Large enterprises. On-premise or custom solutions offer maximum control and customization. Larger organizations often evaluate different types of ERP systems to find the right fit for their size, with specialized ERP software helping manage complex operations.
-
Industry-specific needs. Consider specialized ERP solutions for better alignment with your sector. For instance, companies in logistics benefit from ERP system modules built for supply chain, while manufacturers may prioritize real time production monitoring.
-
Growing businesses. Choose scalable solutions that can adapt to your evolving needs. Ensure your ERP system stays flexible to accommodate the growth of your business
The right ERP system can transform your business operations, but careful consideration of your specific needs is crucial for success. FirstBit's expertise in ERP software can help guide you toward the optimal solution for your organization.
FAQ
1. How many ERP systems are there?
2. Which type of software is ERP?
3. What are the 3 common types of ERP?
4. What are the four different modules of the ERP system?
5. What is the difference between CRM and ERP?
6. Which type of software is ERP?
7. Which ERP tool is best?
8. Is CRM an ERP system?
Connect your office and site teams
Synchronize workflows and approvals with FirstBit
Request a demo
Anna Fischer
Construction Content Writer
Related terms
Share this term
'%3e%3cg%20clip-path='url(%23clip1_6548_6055)'%3e%3cpath%20d='M13.974%2015.6195C14.2724%2016.0185%2014.6532%2016.3487%2015.0905%2016.5876C15.5278%2016.8265%2016.0114%2016.9686%2016.5084%2017.0042C17.0055%2017.0398%2017.5043%2016.9681%2017.9712%2016.7939C18.4381%2016.6198%2018.8621%2016.3472%2019.2143%2015.9948L21.2994%2013.9098C21.9324%2013.2544%2022.2827%2012.3766%2022.2747%2011.4654C22.2668%2010.5543%2021.9014%209.68269%2021.257%209.03839C20.6127%208.39408%2019.7412%208.02862%2018.83%208.0207C17.9189%208.01278%2017.0411%208.36305%2016.3857%208.99606L15.1902%2010.1845M16.754%2014.2295C16.4555%2013.8305%2016.0747%2013.5003%2015.6374%2013.2614C15.2002%2013.0225%2014.7166%2012.8804%2014.2196%2012.8448C13.7225%2012.8092%2013.2237%2012.8809%2012.7568%2013.0551C12.2899%2013.2292%2011.8659%2013.5018%2011.5136%2013.8542L9.42861%2015.9392C8.7956%2016.5946%208.44534%2017.4724%208.45326%2018.3836C8.46117%2019.2947%208.82664%2020.1663%209.47094%2020.8106C10.1152%2021.4549%2010.9868%2021.8204%2011.898%2021.8283C12.8091%2021.8362%2013.6869%2021.4859%2014.3423%2020.8529L15.5308%2019.6645'%20stroke='%235F7896'%20stroke-width='1.39002'%20stroke-linecap='round'%20stroke-linejoin='round'/%3e%3c/g%3e%3c/g%3e%3crect%20x='0.438953'%20y='0.438953'%20width='28.9709'%20height='28.9709'%20rx='14.4855'%20stroke='%235F7896'%20stroke-width='0.877907'/%3e%3cdefs%3e%3cclipPath%20id='clip0_6548_6055'%3e%3crect%20width='29.8488'%20height='29.8488'%20rx='14.9244'%20fill='white'/%3e%3c/clipPath%3e%3cclipPath%20id='clip1_6548_6055'%3e%3crect%20width='16.6802'%20height='16.6802'%20fill='white'%20transform='translate(7.02344%206.58435)'/%3e%3c/clipPath%3e%3c/defs%3e%3c/svg%3e)
Related articles
See all
See FirstBit ERP solutions in action
Discover how our system solves the unique challenges of contractors in a personalized demo.
After the demo you will get a quotation for your company.
After the demo you will get a quotation for your company.
