Custom ERP Development: Should You Go For It?

All business owners want their companies to scale up. And today’s business growth is tightly related to business process automation with software solutions like ERP and CRM systems. These digital products — off-the-shelf and custom — remain the most demanded ones on the IT market, with over 53% of companies successfully adopting them. 

What Is ERP Software?

ERP stands for enterprise resource planning ― a collaborative term for e-tools a company uses to control its business operations, including service distribution, sales pipeline, finance and accounting, customer relations, recruiting and human resources, inventory management, etc. The key goals of ERP systems are to limit manual labor and decrease the use of legacy applications for business management. This is considered achieved if cost-effectiveness and ease of use outweigh the previously mentioned business management methods.

Types of ERP Software

Just like all the companies and teams differ from one another, every ERP system is unique in its own way. In terms of types, or, better to say, ways of getting ERP software for your office, they can be:

• Custom, which means you get to plan and design it and then hire ERP developers to implement it for you. In this case, you become a product owner, and there are no other end users except your employees.
• Off-the-shelf or out-of-the-box programs, the type of software you can find online to deploy in your professional routine. To successfully implement this solution, a quick demonstration and/or consultation with a corresponding person from the ERP seller’s side may be required. Companies like Creatio, HubSpot, Oracle, and Salesforce are among the most popular ERP and CRM providers.
• Cloud-based, also known as SaaS ERP, the software managed and provided by a third party. Their strength is that most of them are very straightforward and easy to adjust and can be scaled to accommodate future business growth needs. Some of the best ERP systems in this group are SAP, Sage Intacct, and Microsoft Dynamics 360.
• Hybrid, the type that we personally prefer to differentiate from the three mentioned above solutions. Hybrid ERP is a customizable version of a ready-made system. This means that even though you buy a system that was designed and developed without your request, the ERP provider allows you to implement unique features for your particular suite. That’s more of a rare type of ERP system, which you can find under the following brand names: Odoo, Apache OFBiz, ERPNext, and Metasfresh.

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While all four of these solutions have their benefits, custom ERP development remains the most popular option. According to Panorama Consulting Solutions, 75% of IT companies believe that customization is the key to ERP success and either opt for fully customized solutions or undergo major adjustments to tailor systems to their special needs.

Benefits of Custom ERP Solutions

Let’s consider the main benefits that bespoke ERP development offers, making their implementation a priority for many companies across industries. 

Flexibility

One of the biggest benefits of a custom ERP project is that it is not limited in functionality. For example, Amazon has integrated all of the key modules in their system, including financial tools, human resources, logistical business needs, sales, and order management, allowing them to keep track of all the core operations from one database. Even if you don’t need as many, custom ERP solutions allow you to add as many ERP modules to your system as you need and not pay for excessive features that are doomed to lie dormant there. 

Increased Efficiency

Custom ERP software is proven to increase efficiency within your organization. With custom solutions tailored specifically to your business needs, you can streamline integrations with other services and spend considerably less resources and time than you would trying to do these things manually. Moreover, the successful implementation of a bespoke ERP results in noticeable cost savings. According to business owners who have integrated ERP into their workflows, they achieved significant reductions in the following areas:

• 40% in IT costs;
• 38% in inventory levels;
• And 35% in cycle time. 

These numbers vividly illustrate the importance of building a custom ERP system for businesses. In addition, the automation of repetitive tasks leads to reduced labor costs, better productivity, and fewer errors in documentation, which is another plus in our book. 

Scalability

Where custom ERP software development beats off-the-shelf solutions hands down is in the scalability department. Development teams create bespoke ERP solutions using scalable technologies, ensuring they can be easily scaled up or down depending on the current business needs. This way, if your clientele grows or your business processes change over time, custom ERPs will have no problem accommodating your growth. That said, it’s worth noting that scalability is only available with an adaptable ERP architecture (we’ll talk about it later in the article). 

Easy to Learn 

Last but not least, custom ERP software solutions require less learning curve than ready-made platforms. This is because they are designed exclusively for your team and come with detailed documentation, making them easy for anyone without lengthy training. 

Disadvantages of Custom ERP Software

While building custom solutions offers plenty of advantages, it also comes with its share of drawbacks, which include: 

High Development Cost

Creating a custom ERP is generally more expensive than getting an off-the-shelf solution. For example, a custom ERP for a large company with 100+ users can cost anywhere from $100,000 to $250,000 and more. Comparatively, a cloud-based ERP software would typically cost around $75/mo per user. This difference is quite substantial. However, if you look at the long-term benefits of a custom ERP and the potential cost savings provided by automation, paying a higher price tag initially may pay you off with a better interest in the long run. 

Longer Development Time

The time frame of Custom ERP app development depends on a number of factors, including:

• Project scope. The more complex the project is, the longer ERP software implementation will take.
• Customization. Custom requirements to the project most often add remarkable time to the time frame. 
• Data migration. Moving business data from the existing ERP solution to a new one requires time, which should be factored in when planning the implementation of ERP. 

Building a basic solution takes from a couple to 6 months, while an ERP system for a larger organization may easily span 2 or even 3 years. This can be viewed as a drawback for companies that undergo rapid growth and/or have strict time frames. 

Dependence on tech expertise

Finally, it can be quite a daunting task to find a reliable custom ERP development company to entrust the development of your future ERP. Many clients spend months before they find the right ERP tech partner, leading to significant delays.  

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Do You Need to Build a Custom ERP Software?

Despite the many benefits that custom ERP software offers, it’s not a one-size-fit-all solution. Therefore, before you decide to invest in building a custom ERP, make sure to consider the following factors to pick the right resource planning tool for your enterprise:

1. Price to Value Ratio

Though we’ve mentioned earlier that using ready-made software is generally cheaper than acquiring a custom solution, it’s not always the case. 

For example, Salesforce, which was initially a CRM solution, expanded over time to various ERP integrations and now can cost up to $300 per user a month. Calculate how much a team of 50 members would need to spend to use this so-called affordable solution, and you’d not think it’s cheap anymore. 

Conversely, a very simple custom ERP’s price can be $50,000 for small- and mid-sized businesses correspondingly. This price is also not very cheap, but when you think about the level of control you’d get over the future functionality of your software and independence from other providers’ servers, it’ll prove to be a much more valuable acquisition.  

Of course, not all-of-the shelf solutions are as expensive as Salesforce. For example, HoneyBook only charges $9 per user a month. If it works for you, then it may be more reasonable to save a few bucks and get an off-the-shelf ERP. Be sure to always look at the long-term perspectives to understand the value of the chosen software and ensure the initial cost savings are worth it.

“When estimating a budget to spend on an ERP solution for your company, don’t focus on numbers too much. Pricing is important, but the value that software may bring to your business is what matters in the long term.”

Bruce Mason, Delivery Director at QArea

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2. Cybersecurity

If you’d like not to disclose your commercial information, you’d need to choose your own ERP system. This is because when you sign a deal with a third-party ERP software provider, you agree to store and process your data through the servers and cloud solutions that belong to the ERP owner you work with. Unfortunately, this doesn’t guarantee you the same level of security as your own solution. Owning your own ERP system doesn’t impose the same risks. You know exactly who can access your business data and can maintain the top security level for your operations.

3. Setup and Development

Most of the out-the-box ERPs are easier and faster to deploy compared to custom systems, which can be an important advantage for businesses with no special tech expertise. On the other hand, this easy setup comes with certain limitations as well. Namely, you and your team will have to adjust new software and teach your employees how to use it correctly, often spending months before the team can use it. The downside is this leads to delays and may even affect the team’s performance negatively at first. 

With modern approaches to custom ERP development, you’ll avoid a long learning curve. Since potential end-users get involved in the project planning process early, they can learn documentation and provide their input on what they need and how they work, eliminating the need for long training and adaptation once the software’s integrated. For companies that strive to use their resources effectively, this is the best way to go. 

Moreover, custom ERP are designed from the ground up to integrate smoothly with your existing technology stack. This can eliminate the need for extensive modifications or third-party integration solutions, saving you a lot of time, effort, and money down the road.  

Companies That Can Benefit From Custom ERP Development

Custom ERP application development can be beneficial for businesses across various industries. The industries where it’s being particularly widespread are healthcare, banking, manufacturing, and ecommerce, all of which store and process volumes of data, such as customer data, order information, inventory levels, and so on. 

In addition, custom enterprise resource planning systems can prove useful for businesses with evolving requirements. Whether small or big, if organizations’ requirements are rather complex and/or often change as the company grows, it can be best to opt for a customized ERP system, allowing them to streamline their operations and enhance data accuracy. 

The Cost of ERP Software Development

Earlier, we’ve mentioned the average price range for the cost of ERP custom development. However, every business is unique, and their requirements may significantly affect the software development cost. By and large, the price depends on the man-hours, complexity of the custom functionality, required integrations, and technologies used. 

Now, in order to estimate how much it’s going to cost you to build an ERP from the ground up, start by analyzing the amount of ERP modules you need and want to implement. On average, the cost of each module is about $9,000. 

Here are the most common ERP elements:

• Human resource management. This module streamlines HR processes like recruitment, payroll, training, and performance evaluation. It helps in managing employee data, tracking attendance, and automating various HR tasks.
• Inventory management. Essential for tracking and managing stock levels, orders, sales, and deliveries. It helps in optimizing inventory levels, reducing costs, and improving customer satisfaction by ensuring products are in stock and orders are fulfilled on time.
• Customer relationship management. Focuses on managing interactions with current and potential customers. It includes features for sales management, contact management, productivity, and more, helping businesses understand their customer base and improve relationships.
• Finance and accounting. This module manages the financial transactions and data of a business and includes features for accounts payable, accounts receivable, general ledger, budgeting, and financial reporting, ensuring accurate financial management and compliance.
• Supply chain management. Allows suppliers and logistic providers to streamline the flow of the goods and services by accessing data in real time. 
• Sales and marketing. Helps in managing sales processes, customer data, leads, and marketing campaigns.
• Production. Essential for manufacturing businesses, this module manages the production process, including product planning, materials sourcing, inventory management, and product scheduling, ensuring efficient production operations.
• Planning and reports. This module aids in strategic planning, helping businesses analyze performance, plan for future growth, and make data-driven decisions based on reports.

Next up, seek help from experts to estimate the required tech stack. At this step, you should get an idea of how many specialists you need to involve in the development process and calculate their hourly rates. On average, you can expect to be charged from $25 to $70 per hour depending on a vendor. Oftentimes, companies resort to the services of development outsourcing teams from abroad to fill the gap in technical expertise and speed up development. The price range across Eastern European developers falls in a bracket within $25-$35. 

Finally, you need to count the man-hours based on the estimated time frame for the development lifecycle. Estimating the exact time can be tricky as there are many factors that may affect the length of the project, which we discuss in detail in our other post. However, you can get a rough idea by considering the average time each stage in SDLC takes to bring a custom product to market. Here they are:

When you have all this data at hand, you can work out the cost of building an ERP system for your business and make informed decisions about whether to go ahead or consider optimizing an off-the-shelf ERP software solution.

How to Build an ERP System

Now let’s dive into the ERP software development process to find out how it works and what you need to do in order to approach this step efficiently.

1. Planning

Any development process starts with gathering and analyzing requirements. So, first things first, take the time to research the market to see what solutions exist, what features they have, and how — or if — they can benefit your business. In addition, research your own needs. How many people are going to use the system? Will it be primarily used as a desktop application, or do you want it to be mobile-friendly as well? How many modules do you want to include? The more questions you ask yourself at the beginning, the higher the chance you won’t miss anything important in later stages when development begins. 

2. Prepare a Blueprint of Your ERP Design

In general, this step is usually entrusted to a professional software development company that knows the ins and outs of ERP system development and can offer the best options in terms of system design. However, if possible, be sure to assist them at this stage. At the end of the day, it’s you who knows your team and business better than anyone else and, if you stay actively involved in the designing phase, it’ll help make life easier for everyone involved. 

Choose the Type of the ERP Architecture

At this step, you should also decide on the type of the ERP architecture that best suits you. In general, there are two options: monolithic and postmodern ERP systems. 

Monolithic ERP systems, as the name suggests, are rather simple in nature. Designed by a single vendor, they form a complete system of services users can interact with. However, their downside is that they are not flexible. If you decide to scale it, you’ll need to use services from other vendors and pay extra to seamlessly integrate it with your existing workflow. 

Conversely, postmodern ERP systems are more flexible. The unique thing about them is that each of their modular blocks can work autonomously while being a part of the entire ERP system. Unlike monolithic solutions, postmodern ERP can be designed by several vendors without compromising the system’s performance. When it comes to their downsides, the biggest of them is that each of its modules need to be updated separately, which can be time-taking and difficult. 

When choosing the architecture, consider the resources you have and what’s going to work for you better as your company continues to grow. If unsure, don’t hesitate to speak to ERP consultants who can help you choose the right solution. 

Decide on UI/UX Design

Besides the architecture, the user interface (UI) and user experience (UX) design are crucial aspects of your ERP system. You want your system to be not only functional but also user-friendly. Therefore, make sure that your navigation is clear and easy to understand, and everyone, regardless of their tech background, can get the knack of it quickly. Also, if you’re planning to use it across devices, pay attention to the ERP system’s responsiveness. It should adapt to different screen sizes to provide a seamless user experience. 

3. Consider Tech Stack

If you have in-house developers, make sure that you choose the right technology for them to build custom ERP solutions. Most often, companies use either C++ or C# or Objective-C or Swift for this purpose, depending on the OS. In case you’ve never built an ERP before and you’re not quite sure which technologies to use to fit the requirements of your application, you can always ask for help from reliable software development companies. 

For small- and middle-sized companies without their own development teams, it can be a better decision to outsource development. With the support of a skilled ERP development team, you’ll not only be able to mitigate the most common challenges mentioned in the sections above but also make more accurate estimates and eliminate unnecessary development expenses later on.

4. Integrate ERP Modules

Most companies use their ERP systems with other integrations. For example, banking ERP systems heavily rely on APIs to gain real-time data access to track the status of account balances, transactions, or processing payments. The healthcare sector uses various third-party integrations as well, including EHR systems, insurance claim processing, and so on. That’s where you need to map out your integrations with the development team to anticipate and avoid any possible roadblocks. 

5. Develop, Test, and Deploy

Once you’ve completed all of the steps above, you can finally entrust your product to experienced developers to transform your vision into the effect on your behalf. How much you personally want to be involved from now on is up to you to decide. Some companies choose to hire dedicated development teams, ensuring they have direct control over product development, while others prefer to step aside and only get updates on the flow. Either option is good in itself and is a matter of personal choice. 

Why Choose QArea

When choosing an ERP software development team, the decision is pivotal. Your ERP system is the backbone of your business operations, and the right team can make all the difference. At QArea, we understand the significance of this choice and offer you compelling reasons to select us as your trusted ERP solutions provider

• Expertise across industries: Our ERP software development team comprises over 350 experts who have worked across a spectrum of industries, including Fintech, eCommerce, Healthcare, and Hospitality Services. This diverse experience equips us with a deep understanding of industry-specific challenges and requirements. We bring this wealth of knowledge to every project, ensuring that your ERP system is tailored precisely to your industry needs.
• Custom ERP solutions: We recognize that one size does not fit all. That’s why we specialize in creating custom ERP systems that align seamlessly with your unique business processes and objectives. Whether you need a custom ERP system from scratch or want to customize an existing system, our team has the skills and experience to deliver.
• Proven track record: Our team has a successful history of helping companies customize ERP solutions such as SAP, Odoo, etc. These case studies showcase our ability to understand complex ERP systems and adapt them to suit the specific requirements of our clients. 
• Dedication to excellence: We are committed to delivering excellence in every project we undertake. Our ERP software development team works tirelessly to ensure that your ERP system not only meets but exceeds your expectations. We focus on user-friendly interfaces, seamless integrations, scalability, and robust security to create a software solution that empowers your business.

In conclusion, choosing the right ERP system and development partner is a critical decision for your business. At QArea, our extensive expertise, customization capabilities, proven track record, and dedication to excellence make us the ideal choice for creating a custom ERP software system that helps your business thrive.

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Summing Up

Custom software development is a complex process that requires full dedication and a lot of effort. However, if the cons of custom ERP systems outweighed its many benefits, the IT industry would never reach the size it is today. Businesses understand the importance of customization and have switched to tailored ERP solutions more actively in recent years. 

Moreover, it only seems that opting for custom ERP software development services is expensive. A closer look reveals that developing and maintaining custom ERP projects often turns out to be cheaper than off-the-shelf software solutions. Add to this the advantages that owning your own ERP offers, from better data security to unique functionality for industry-specific operations, and you can see why it’s much more beneficial to develop a custom ERP.