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Definition of Hybrid ERP

What is hybrid ERP?

Hybrid ERP combines on-premises enterprise resource planning systems (ERP) for managing essential business processes with cloud software for specialized functions. ERP software covers essential business functions like accounting, HR, inventory, and purchasing. It aims to have a single system for all major business activities.

Two common Hybrid ERP architectures are:

  • Two-tier ERP — Here, a central on-premise ERP system handles core functionalities for the entire organization. Additional, cloud-based ERP systems are then implemented to cater to the specific needs of individual business units or geographical locations.
  • Enhanced on-premise ERP — This approach focuses on adding cloud-based applications to an existing on-premise ERP system. These cloud applications can address specialized functions that aren't core to your business but still require robust management.

What are the advantages of ERP

  • It focused on automation. ERP allows evaluating processes and finding more profitable solutions for different business sectors using AI, thereby reducing errors caused by human factors.
  • They facilitates a smooth migration between on-premises and cloud applications, allowing you to move functionalities to the cloud at your own pace strategically.
  • By combining on-premises and cloud resources, hybrid ERP enhances business continuity and disaster recovery. If your on-premises data center experiences an issue, the cloud-based components can keep your operations running with minimal disruption.
  • Companies often require compliance with government regulations. Using a hybrid ERP system makes meeting these requirements easier than changing the current system. Additionally, such systems are useful for partnerships or when a company undergoes restructuring.

How does hybrid ERP function

Hybrid ERP combines traditional on-premises ERP with cloud-based applications:

  • Core ERP system resides on in-house servers, housing proprietary or sensitive data (financial records, customer information, or intellectual property ) and managing critical processes (core business functions like manufacturing, inventory control, or supply chain management).
  • Non-sensitive data and additional applications, such as SaaS modules, are hosted in the cloud.
  • Integration via APIs or middleware ensures seamless data flow between the core ERP system and cloud components.

Use cases for hybrid ERP

While the search results didn't list specific companies using hybrid ERP systems, different types of companies might use a mix of cloud and on-premise software for their business needs: 

  • Manufacturing — Complex supply chains and geographically dispersed operations can leverage on-premises systems for core processes, while utilizing cloud solutions for specific functions like CRM or SCM in certain regions.
  • Global enterprises — Large corporations with subsidiaries can utilize a central on-premises ERP for global oversight, while individual subsidiaries run cloud-based systems tailored to local needs and regulations.
  • Healthcare and pharmaceuticals — Sensitive data might necessitate on-premises ERP for core operations, but cloud-based modules can be used for research, development, and customer engagement activities.
  • Retailers with E-commerce — Hybrid systems can combine on-premises ERP for inventory and supply chain management with cloud-based solutions for e-commerce platforms and customer engagement tools.
  • Technology and software companies — These companies might prioritize on-premises ERP for intellectual property and development processes and use cloud-based systems for sales, marketing, and customer support for agility and scalability.

Key Takeaways

  • Hybrid ERP, combining on-premise and cloud systems, offers businesses a flexible and adaptable solution.
  • It allows you to leverage on-premise security for critical data while using cloud scalability and ease of use. This approach enables automation, scalability, flexibility, business continuity, and regulatory compliance advantages through hybrid solutions.
  • Two-tier ERP involves a central on-premise system added by cloud solutions tailored to specific business units or regions, while enhanced on-premise ERP incorporates cloud applications for specialized functions alongside existing systems, ensuring comprehensive coverage of business needs.
  • It hosts a core ERP system on internal servers for sensitive data or critical processes, while non-sensitive data and additional applications are hosted in the cloud. Integration via APIs or middleware ensures seamless data flow between the on-premises and cloud components.
  • Industries like manufacturing, global enterprises, healthcare, retail, and technology can leverage hybrid ERP systems to optimize operations and adapt to changing business landscapes.