All business owners have one thing in common ― they want their companies to scale up. And as we already know, business growth is closely tied to business process automation with software solutions, like ERP and CRM systems. These kinds of digital products remain the most demanded ones on the IT market, both off-the-shelf and custom. Today, we’re focusing on custom ERP development and its specifics for business: the good, the bad, and the price it would take you to get a quality ERP system for your company.
ERP Software: Terms and Types
ERP stands for enterprise resource planning ― a collaborative term for e-tools a company uses to control its operations, including service distribution, sales pipeline, finance and accounting, customer relations, recruiting and human resources, inventory management, etc. The key aims of ERP systems are to limit manual labor and decrease the use of legacy applications for business management. These are considered to be achieved only if cost-effectiveness and ease of use outweigh the previously mentioned business management methods.
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 either:
- 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 than your employees.
- Off-the-shelf, or out-of-the-box programs that you can find online and deploy in your professional routine after a quick demonstration and/or consultation with a corresponding person from the ERP seller’s side. Companies like Creatio, HubSpot, Oracle, and Salesforce are among the most popular ERP and CRM providers.
- Hybrid, a type that we personally prefer to differentiate from the two mentioned above. Hybrid ERP is a customizable version of a ready-made system. Meaning, 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.
Custom ERP Development: Is It Any Better Than Off-The-Shelf?
Even though starting a software project for your own company seems to be quite a journey, our experience proves ERP development from scratch always pays back, and in spades. Below you can find the factors that you should consider when deciding which resource planning tool would be better for your particular enterprise:
Price to value ratio
As a rule, stuff that’s ready-made is way cheaper than custom, right? However, counting numbers without analyzing the value custom software can bring to your team would be irrelevant. For example, Salesforce, which was initially a CRM solution but over time expanded to various ERP integrations, can cost up to $300 per one user a month. Calculate the amount of money a 50-member team would spend on that so-called affordable solution ― about $180,000 annually. Let’s compare this number to custom ERP costs. Hourly rates for software development services range from $40 to $350 depending on the region and provider size, while the starter budget needed to develop a software product ranges from $10,00 to $50,000 for small- and mid-sized businesses correspondingly. Add to this the ability to directly influence the future functionality of your software and product ownership that in its turn opens new opportunities for your business.
“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.”
Signing a deal with a third-party ERP software provider is impossible without disclosing your commercial information to it. This means you agree to store and process your data through the servers and cloud solutions belonging to the ERP owner you work with. Companies that prefer to keep their commercial information private choose to own their ERP systems, not rent them. In this case, you will know by name who can access your business data and maintain the top security level for your operations.
Setup and development
Beyond question, out-the-box ERPs are easier and faster to deploy compared to custom systems. But this easy setup comes with certain limitations as well. Namely, you and your team will have to adjust to the new software and teach your employees how to use it correctly, which can take months and even affect the team’s performance negatively at first. With modern approaches to custom ERP development, potential end-users get involved in the project planning process early which later eliminates the need for employee training. In other words, after your team took part in ERP development itself, it already knows how to use it before it’s actually finished.
Functionality and scalability
Of course, any commercial ERP development company will tell you that their solution is the most feature-rich and adaptable, and that’s ok. After all, they believe in what they’ve created, and they also need to sell their ERPs to keep the company afloat. But you still need to ask yourself, do your operations require a ton of features to be effectively managed? When it comes to fast yet powerful software, fewer functions often means more power. Custom ERP development allows you to start with basics and then expand the functionality over time adding only what’s necessary at the moment, instead of overwhelming your team with functions they won’t even use but also can’t remove from their dashboards.
Custom software development is a complex process that requires full dedication and a lot of effort. However, if the benefits wouldn’t outweigh the drawbacks, the IT industry would not reach its enormous size. With custom ERP systems, it might seem like a more expensive way to go for a business, but in the long run, it appears to cost less to maintain and develop. Aspects like data security and unique functionality for industry-specific operations also add points to custom ERPs. In case you were thinking of a custom ERP project for your company, our team is ready to share our ERP development experience with you through a free consultation.