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The Basics of 2-Tier ERP: Systems of Record & Systems of Engagement

In this day and age, it is important for enterprises to leverage both systems of record and systems of engagement that are integrated together. This approach is referred to as “two-tier ERP.” The system of record tier usually consists of on-premise ERP (Enterprise Resource Planning) systems, and the system of engagement tier is generally a Cloud-based solution.

What’s a System of Record?

A system of record is a data storage system that acts as the source of truth for the data contained within it. The data in this particular kind of system is the most complete, up-to-date and accurate. In many organizations, it is essential to utilize systems of record due to data integrity issues that can arise when multiple systems are manipulating the same pieces of data. Similarly, oftentimes certain data may be stored in multiple data sources, which can cause a lot of headaches. SAP is a common backend system of record.

What’s a System of Engagement?

A system of engagement is an interactive, connected and collaborative system that fosters communication amongst users. Many of these types of systems behave a lot like social networking sites. In addition, these systems emphasize a positive user experience and work well across many different types of devices. Salesforce is a great example of a system of engagement.

Why is this type of system so important? Traditional ERP systems that provide the core business functionality for many organizations have their downsides. Most notably, they are expensive and simply cannot keep up with the fast pace of innovation. The system of engagement tier solves these issues by being much cheaper and more agile. The agile nature of these systems allows businesses to quickly and cheaply tailor their services to target specific customers, employees or partners.

In fact, the relationship works like this:


What’s the Biggest Takeaway?

Adopting a two-tier approach can help you stay competitive within your respective market and give you the ability to reach out to new markets more easily. In fact, many organizations are starting to move more of their back-end processes and functions into the system of engagement layer (e.g., using FinancialForce for accounting needs in Salesforce).

Of course, the two-tier approach is not a one-size-fits-all solution, but many organizations may find it useful to evaluate and determine if it is a good fit.

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