ERP, or enterprise resource planning, refers to business management software that’s designed to collect and analyze data from various departments within a company.
It’s used to track cash flow, inventory, and other resources, and can be used to handle payroll, customer orders, purchase orders, and more. In short, it’s a highly technical -- but user-friendly -- piece of software that keeps your business running smoothly.
Since ERP software can be used by multiple departments, it makes it easy for various teams -- such as procurement, distribution, and accounting -- to work together. It also allows for contact with external vendors elsewhere on your supply chain.
While there are plenty of off-the-shelf ERPs available, many companies choose to build their own custom ERP from scratch to suit the needs of their business or industry. Let’s look at some of the pros and cons to consider when deciding on an ERP.
Building a custom ERP - is it worth it?
As with any type of software, you can expect a custom ERP to cost you more money up front -- but it may also save you money in the long term.
Not only will you avoid having to pay licensing fees year after year, it may even help you reach your business goals faster because it’s designed specifically for you.
Does that mean that building a custom ERP is worth it? That depends on a few factors, including your budget, your goals, and where you’re at in the business lifecycle. If you can afford it, then a custom ERP can be key to helping your business grow.
But first, let’s get clear on what customization entails. Most ERPs allow for some degree of configuration. This means you can choose from various features that are built into the software, or set different fields or parameters based on your industry.
For some companies, that will be enough. But for especially large or unique businesses, further customization is required. This can involve anything from changes to an existing ERP’s code, to the creation of an entirely new platform from scratch.
A custom ERP can mean a robust platform with features that most ERPs don’t have, or it can be a streamlined system without any extraneous features. When it comes to ERP software, complexity isn’t necessarily better.
So, no matter what kind of ERP you have in mind, let’s look at some of the advantages and disadvantages of creating your own platform with the help of a developer.
The primary advantage to building a custom ERP is that your team can keep doing what it’s currently doing -- only better. Unlike an off-the-shelf product, which may require your team to change its workflow in order to use it, an ERP that’s made-to-order can be built around your existing workflow and incorporate your current practices into it.
That doesn’t mean there won’t be any adjustments to your workflow, but at least they’ll be intentional ones. From integrations with software that you’re currently using, to new tools that automate your existing practices, a custom ERP can provide your team with more efficient ways to complete their everyday tasks.
These tasks can include everything from:
- Business intelligence
- Regulatory compliance
- Supply chain management
- Human resources (hiring, payroll)
- And more
Some ERPs even include elements of a CRM, although typically these are two different systems and should be designed separately.
With a custom ERP, you can avoid features that confuse your employees and slow the system down, while building customized modules for individual departments.
And if you’re dealing with confidential data that can’t be shared directly with all of your teams, you can assign different access privileges to each department.
Some of these options may be available with off-the-shelf ERPs, but building a custom platform offers you a greater degree of control.
You can even incorporate your own branding into the platform for a consistent look and feel, and to increase team spirit and company loyalty.
As you scale your company, you won’t have to worry about whether the software can keep up with your growth.
You can continue to add new technologies, such as artificial intelligence and machine learning capabilities, to crunch your data and give you a competitive advantage.
You’ll also be able to update and maintain the system in-house, with your own IT team, rather than rely on a third-party vendor to address any technical issues.
Despite all the advantages of custom ERPs, they aren’t right for everyone. In particular, smaller companies may have better luck with an off-the-shelf ERP. Why is that?
For one, custom ERPs take a lot of time and energy to develop. If you’re in a hurry to implement an ERP and you don’t have time to wait for a customized piece of software, then it may be better to use an off-the-shelf option rather than to have none at all.
And since custom ERPs haven’t been tried and tested on the market, there’s a greater chance of having technical issues that you’ll need to troubleshoot down the road.
Your rollout may take longer and require more training, since you won’t be able to rely on third-party documentation or employees who have used the software before.
If your budget is limited, then you may end up having to make a trade-off between the size and functionality of your product and the quality.
Additionally, building your own software frees you up from a long-term commitment to a third-party platform, but you may end up relying on your developer instead.
After all, you’ll need someone to create custom apps and other upgrades, and you’ll still be reliant on third-party hardware.
That’s why it’s important to choose a trusted ERP developer like Zibtek who can guide you through the entire process from start to finish.
The cost is the most important thing.
It’s no secret that custom ERP development can cost a lot of money, which is why many businesses don’t consider it at all. But those same businesses may not realize just how much they’re spending on SaaS services over the lifetime of their company.
For example, Microsoft Dynamics 365 costs up to $210 per user per month, with added costs for some licenses, such as AI-powered apps. Depending on how many users you have, your monthly subscription costs can easily rival the cost of a custom build.
An off-the-shelf ERP is cheaper to begin with, but if you continue to add new users each month, you may be stuck paying higher fees and you’ll be trapped in the system.
The more your business grows, the more time and energy it will cost you to switch to a new platform. In the end, you may decide to develop a custom ERP after all!
Instead of paying a monthly user fee, you could be investing in your own ERP from the start. An ERP should last from 5 to 10 or more years before needing an overhaul, so it may be a sounder long-term investment.
Besides, an off-the-shelf product is only “cheaper” if you don’t take ROI into account. If what you really need is a custom ERP, then that’s why you should invest in it.
If you buy an ERP with limited options that doesn’t meet your needs, you’ve spent less money, but will be holding your business back from reaching its full potential.
Remember, the risks and benefits depend on your business plan and cash flow, so you should do the math and compare your options before making a decision.
If you’re a small business with only one location and less than 30 users, then a custom ERP might be overkill. But if you have revenue in the millions of dollars, have a hundred or more employees, or are planning on rapidly scaling your company, then you may be a candidate for a customized system.
Find the right developer for your custom ERP.
Once you’ve decided on building your own ERP, it’s important to find a developer who will stick with you for the long-haul.
While outsourcing your project to an overseas developer may sound appealing, the last thing you want to do is go with the cheapest deal you can find and end up with a buggy product with no ongoing support from your developer.
You should take the search for a developer as seriously as you would the search for any other long-term partner in your business.
After all, you can expect to be working with them for at least a few months, helping them understand the inner workings of your business.
You’ll want to find a developer who:
- Has a track record of building complex ERP platforms
- Takes time to understand your company’s unique requirements
- Is available for ongoing maintenance and support
Find out how the team plans to work with you as a client, what kind of product testing they do, and what their implementation process looks like. Ideally, your development team should be able to visit your site and see your business operations in person.
The team at Zibtek meets all of these requirements, and has offices in Salt Lake City, UT, as well as in India, making it easy to get real-time support in your time zone, no matter where your company is based.
They have extensive experience in ERP development, and will work with your team to find straightforward solutions for your business needs using modern, reliable software. Reach out today to learn how you can build a custom ERP for your business!