What are different types of ERP? - Firstbit Blog
Discover the world of construction through our expert insights
What are different types of ERP?
9 min read

What are different types of ERP?

Published 5 Apr 2023
If you're a business owner, you know that streamlining operations is key to success. One of the most effective ways to achieve this is by implementing an ERP system. However, choosing the right one for your business can be overwhelming with the many options available. 

That's why we've created this guide that answers your question on what are the different types of ERP systems, including: 
  • Custom, ready-made, and hybrid ERPs
  • Cloud-based and on-premises ERPs
  • Generic and industry-specific ERPs

We'll also talk about how to choose the right one for your business. But let's first understand ERP's meaning.  

What Does ERP Mean?

Enterprise resource planning software is a tool that allows you to manage all your business processes from one place. It collates data from all the departments, including sales, marketing, and customer service, to better understand your customers. You can also manage inventory, supply chain, procurement, and finances from the ERP software. 
ERP systems provide a unified view of your processes, enabling you to make more informed decisions. ERP in Dubai also enables you to comply with UAE VAT laws and data protection regulations. 

While the modules vary significantly, most ERPs have the following features:
  • HR & payroll
  • CRM
  • Sales
  • Purchasing
  • VAT
  • Project cost management
  • Finance and Accounting
  • Inventory management

However, ERP software typically has a modular architecture, which allows businesses to choose which modules they need based on their specific requirements. For example, a company may only need the finance and HR modules, while another may require inventory management, sales, and customer relationship management modules.

Custom, Ready-Made, and Hybrid ERPs

Custom ERP systems are tailored to your business needs and built from scratch based on your unique requirements. A third-party vendor typically develops this type of ERP. The end product is a fully customized solution for your company's needs. The main advantage of a custom ERP is that it is tailored to your needs and can be designed to integrate with existing software solutions. However, developing it can be expensive, time-consuming, and require ongoing support and maintenance.

Here are some key benefits of custom ERP systems. 

  • Tailored to fit your business processes and specific requirements
  • Offers better integration with existing systems and software
  • Greater flexibility to accommodate changes in business processes

Ready-made ERPs are off-the-shelf solutions ready to be deployed right out of the box. These solutions are pre-built by vendors and offer a range of functionalities that cater to various business needs. The main advantage of ready-made ERPs is that they are easy to implement and have a lower upfront cost than custom ERPs. However, these solutions may not perfectly fit your business needs and require customization or additional integrations.

Here are some key benefits of ready-made ERP systems. 
  • Easy to implement and quick to deploy
  • Lower upfront costs compared to custom ERP systems
  • Often come with a range of pre-built functionalities and features that cater to a wide range of business needs

Hybrid ERPs are a mix of custom and ready-made solutions. They offer the best of both worlds by combining the flexibility of custom solutions with the convenience of ready-made ones. With a hybrid ERP, you can start with a ready-made solution and customize it to fit your business needs. This type of ERP is becoming increasingly popular as it allows businesses to have a customized solution without incurring the high costs and lengthy development times associated with a fully custom ERP.

Here are some key benefits of hybrid ERP systems. 

  • Offers the flexibility of customization while minimizing development time and cost
  • Can accommodate specific business requirements while still leveraging pre-built features and functionalities
  • Is a cost-effective alternative to fully custom ERP systems while still delivering the level of customization needed

Cloud-Based and On-Premises ERPs

Another important factor to consider when selecting an ERP system is whether to choose a cloud-based or on-premises solution. Each option has advantages and disadvantages, so it's important to understand their differences.

Cloud-based ERP systems are hosted on remote servers that you can access online. This means you don't have to worry about installing or maintaining software or hardware as the vendor handles them. This frees up your time and resources to focus on running your business. Also, cloud-based ERPs are scalable and often cost less upfront. This makes them an ideal choice for businesses with remote workers or multiple locations. Other benefits include:
  • Easy to upgrade and scale as your business grows
  • Automatic data backups and disaster recovery options
  • More secure than on-premises solutions due to constant security updates and maintenance

On-premises ERPs, on the other hand, are installed and maintained on servers located on your business premises. This option offers greater control over the solution and is typically preferred by larger organizations with complex IT infrastructures. An on-premises ERP lets you completely control and customize the system to meet your needs. Other benefits of on-premises ERPs include the following:
  • Greater security and control over your data
  • Ability to integrate with existing on-premises systems
  • Lower long-term costs compared to cloud-based ERPs, as there are no ongoing subscription fees

Generic and Industry-Specific ERPs

Generic ERP systems are designed to meet the needs of a broad range of businesses and industries. These systems are highly customizable and can be tailored to your specific requirements. They typically offer accounting, inventory management, HR, and CRM features. Generic ERPs are a good fit for businesses with standard requirements that do not operate in a highly specialized industry.

On the other hand, industry-specific ERP systems are designed to meet the unique requirements of a particular industry or sector. These systems are pre-configured with industry-specific functionalities. For example, an ERP system for the manufacturing industry would have features such as bill of materials, production planning, and shop floor control. Similarly, an ERP system for the healthcare industry would have features such as patient scheduling, clinical documentation, and medical billing. Industry-specific ERPs are a good fit for businesses operating in highly specialized industries with unique requirements.

Consider your business's requirements and budget when choosing between a generic or industry-specific ERP system. Generic ERPs are highly customizable and flexible but may lack industry-specific features. Industry-specific ERPs are pre-configured with specialized features but may be more expensive.

How To Choose the Right ERP Software?

Now that we know what are the different types of ERP systems, let's understand how to choose the right one. 
Choosing the right ERP software for your business is a critical decision with far-reaching consequences. The right ERP software can help streamline your business processes, improve productivity, and reduce costs. However, the wrong ERP system can result in lost productivity, decreased efficiency, and costly mistakes. In this article, we'll outline some key factors to consider when choosing the right ERP tool for your business.

1- Define Your Business Requirements

The first step in choosing the right ERP software is to define your business requirements. What are your business goals, and what functions and features do you need in an ERP system to achieve those goals? Some common business requirements include:
  • Financial management and accounting
  • Inventory management
  • Production planning and scheduling
  • Sales and customer relationship management
  • Human resources management
  • Supply chain management

Defining your business requirements will help you identify the specific features and functionality you need in an ERP system.

2- Consider Scalability

Another important factor to consider when choosing an ERP system is scalability. Will the ERP system be able to grow and adapt as your business grows and changes? Look for ERP systems that can scale up or down depending on your business needs.

3- Evaluate Vendor Support and Expertise

It's essential to choose an ERP vendor with strong support and expertise. Ensure the vendor provides reliable support and has experience in your industry. Consider the vendor's training and support offerings and ensure they can provide the support you need to get up and running with the new system.

4- Cloud-based vs. On-premises

Cloud-based ERP systems are becoming increasingly popular due to their lower upfront costs and scalability. However, on-premises ERP systems may better fit businesses with strict data security and compliance requirements. Consider your business's needs when deciding between cloud-based and on-premises ERP systems.

5-  Don't Ignore Integration

When choosing an ERP system, it's essential to consider whether it can integrate with other systems and applications your business uses. Integration can help streamline processes and reduce duplication of work, resulting in increased efficiency and productivity.

6- Evaluate the User Interface

The user interface of the ERP system is crucial to ensure that it is user-friendly and accessible to your team. A system with an intuitive user interface that requires minimal training can save time and resources in the long run and help ensure successful adoption by your team.

7- Customization Options

Consider whether the ERP system offers customization options to meet your business needs. Look for systems that offer flexible configuration options, custom reports, and the ability to customize workflows.

8- Vendor Reputation

Another important factor to consider is the vendor's reputation in the industry. Look for vendors with a proven track record of success and positive customer reviews. Consider contacting other businesses in your industry to get their feedback on the ERP system and vendor.

9- Budget

It's important to determine your budget when choosing an ERP system. Consider the total cost of ownership, including implementation, training, and ongoing maintenance and support. Look for ERP systems that align with your budget and offer a good return on investment.

10- Management Buy-In

Implementing an ERP system is a significant investment, and it's crucial to have buy-in from management and other key stakeholders. Involve all relevant parties in the selection process to ensure the chosen system aligns with the business's goals and objectives. This can help ensure successful adoption and long-term success.


Choosing the right type of ERP software for your business is crucial. It helps streamline processes, increase efficiency, and improve overall productivity. Begin by defining your needs and budget to narrow down your choices. Decide between on-premise and cloud-based ERP solutions. Then, ensure it has all the features you need to take your business to the next level!

First Bit Team
Share this post
Learn how to take control
of your processes and scale your business with FirstBit ERP now!
Contact us to get a free consultation and quotation for your business.
First Name
Phone number
By clicking this button, you agree to our Privacy Notice and Terms of Service.
Request a demo
Thank you!
A First Bit expert will contact you shortly to schedule your demo.
Something went wrong.
Try onу more time or reload the page.
Related articles