Accounting Information Systems: The Processes and Controls, 2nd Edition

MARKET SEGMENTS OF ERP SYSTEMS (STUDY OBJECTIVE 5)

There are at least two tiers of ERP systems within the market for ERP soft ware. Tier one includes software often used by large, multinational corporations. Tier two describes software used by midsize businesses and organizations. As discussed in an earlier chapter, software vendors attempt to expand the market for their software products by appealing to a market segment outside their nor mal market. For example, tier one vendors attempt to make changes in their software that make it appealing to smaller companies in the tier two market. Likewise, tier two vendors attempt to scale up their products so that they appeal to larger companies that may be tier one companies. The typical tier market ERP systems are explained next.

TIER ONE SOFTWARE

Tier one software is usually implemented in very large organizations and is extremely expensive. A minimum cost to purchase tier one ERP software is approximately $350,000. Often, the cost of the software with all desired modules exceeds $1 million, and consulting fees to implement the software can add an extra $1 million or more. The three most popular ERP systems in tier one are SAP, Oracle, and Peoplesoft.

SAP

A brief history of SAP was given earlier in this chapter. The company called SAP was formed in 1972 by five former IBM employees. Their intent was to develop and sell application software for real-time processing of business processes. In 1973, they released version 1 of their software, ...