ERP – Enterprise Resource Planning is a software designed to help organizations manage their entire business process from inventory, manufacturing, marketing, HR, and logistics to finance. It allows organizations to polish the workflows. The popularity of an ERP has touched skies in the last few years. The total ERP market size is expected to reach $49.5 billion by 2024. In North America, the market has already exceeded $10 billion.
In this article, you’ll learn more about ERP systems and find out how to build custom ERP software.
Why Build Custom ERP vs. Subscribing for a Ready-Made Software?
Before heading to the discussion, let me visually explain my point.
ERP software is meant to solve organizations' issues and provide them with a smooth workflow instead of confusion. Many factors proved overtime that a custom ERP is better than a ready-made ERP software.
Let’s look at these factors one-by-one:
If you are wondering if building an ERP system will cost you more than buying a subscription to a ready-made software, you need some research. A ready-made ERP software will charge a monthly or yearly subscription fee per user along with license fees. Take the example of SAP ERP. They charge a $49/monthly fee per employee along with a fixed $3000 license fee.
So, how much will you pay if your company has 200 employees?
- License Fees = $3000
- Subscription for 200 Employees = $49 X 200 = $9800
- Annual fees = $9800 X 12 = $117600
- Total Yearly Fees = $117600 + $3000 = $120,600
And, you will keep paying such a huge amount for many years to come. Whereas, if you build your custom ERP, not only will it cost you one time, but in the future, you can develop it further for extensions.
Deployment Process Comparison
Some of the most popular ERP systems are “archaic.” They offer an unintuitive user interface and are very complicated to deploy. At times you need to go through a 10 page PDF to fill the delegation cost in the system, and after a few days, you get the ‘ERROR’ that something is missing, so you have to go through the same process again.
Of course, modules directed for high-level management and executives have modern, good looking dashboards, so the people in power are often not aware of how hard it is to keep it working with the system daily.
But, if you go with a custom ERP, your developer will be familiar with the overall deployment. They will not be dependent on other developers for fixing errors and bugs.
Missing process-specific Functionalities
This “small drawback” is the peak of an iceberg. There are two common paths users takes:
- Ignore the missing functionalities - you lose some data, but it may be the lesser of two evils.
- Create a “fallback feature” with what we have - people start to add things that are not designed for this kind of data. The process is not controlled, so everyone has their own way of doing. People are using a feature designed for different stuff, so some fields which are N/A for their stuff but required in the process are randomly filled to pass the form. It starts slowly, but this snowball will get bigger with time.
With a ready-made solution, you can start quickly compared to a custom made ERP software. Creating a tailored solution is a process that takes months or more.
Having a big all-in system with thousands of options can be confusing at the beginning. The employee needs to get to know the company product, the process, people, and the avalanche of new things. A custom made ERP can help an employee find a new place with an intuitive and guided system that simplifies the process instead of messing it.
Employees tend to resign from the job often. So, suppose you have a ready-made ERP deployed in your organization. In that case, you will need to contact the development team every time to revoke the resigned employee access and assign it to the new employee who will replace the old one. It would be a highly-risky process with lots of paperwork. Instead, a custom ERP will help you reduce the risk and paperwork. Since it is homemade, your developer can discontinue the access and create a new one in no time.
Custom ERP is an Investment
The starting cost will be higher, but when your system is ready, the monthly expenses of upkeep and maintenance are a drop in the ocean compared to ready-on solutions.
There is a group of users that will use the ERP software from time to time. It is essential to keep the path as simple as possible, so they don’t need to go to someone else each time they need to fill something in the system. With custom ERP, you can design the path of keeping your employees in mind. Whereas, in the case of ready-made software, you are bound to use the same as developed by the company.
Improvement and Standardization
In the case of a custom ERP system, you have the extra advantage of reviewing internal company processes and finding possible improvements or standardization.
When it comes to custom ERP, the cost of building the ERP will remain the same no matter if you are making the software to be used by 100 employees or just 10. Whereas, in the case of a ready-made ERP, you will pay-as-you-need.
Adopt the Environment
Implementing a tailored ERP system is consistent with Kaizen. It is a Japanese term meaning "change for the better" or "continuous improvement." It is a Japanese business philosophy regarding the processes that continuously improve operations and involve all employees. Kaizen sees improvement in productivity as a gradual and methodical process.
Similar to Kaizen philosophy, a custom ERP keeps bringing the improvement with every step. By introducing step by step, feature by feature lowers the entry threshold, gives users time to get familiar with the system, lowers the frustration and common for every person rejection to change.
Now, let’s move on to the technical part and see how to build a custom ERP.
How to Build a Custom ERP?
Building an ERP from scratch seems like the right investment. Ready-made ERP solutions can’t provide the set of features a company might need to do their business effectively.
That’s why building ERP software can save a lot of money in the long-term.
Let’s find out how to make an ERP software step by step.
Step # 1: Know the Goals & Requirements
First of all, you need to be sure whether you need a custom ERP or an off-the-shelf solution that will fulfil your requirements. Analyze the cost of building a custom ERP and your budget requirements. To answer all these questions, you need to know why you need an ERP in the first place.
Know your goals, requirements, audience, and decide the outcomes. It would be good to communicate with employees from different departments to figure out their problems and solve them with ERP. You can start with:
- Start with a detailed analysis of your entire organizational structure from top to bottom. Starting on the department level, go down and list your processes, data, or assets you want to control.
- Define what features you will need and prioritize them.
- Find the bottlenecks in the organizational process. Evaluate in which department improving the process will give you more revenues.
- Define the group of users who will use the ERP system.
Step # 2: Find a Company to Outsource the ERP Development
After doing the complete analysis, gather your development team and work on custom ERP functionality and UX design. Start creating a list of requirements and then proceed with project documentation. The initial tech document should include details like:
- Features description
- Details of the platform either it will be a pre-installed desktop app or web service
- Required integrations
- Projected future product capabilities
- Project timelines
Present the tech development document to a specialist (a business analyst is the best choice) who has a deep understanding of your business processes. Now, if you are confident enough on your in-house development team, you have two options that they will execute the ERP as it is drawn on paper, then proceed or find a company to outsource the development process.
You need to do complete research to choose the right company with an expert development team who knows how to build a custom ERP. The best approach to hire the right software development company is by taking a look at their portfolio and previous clients’ feedback. At Selleo, we have worked with many clients including the big name of the industries such as Breezeway, Catalyst, Alyne and much more.
You can check the complete portfolio.
We have earned a name as one of the best software development companies and got mentioned in Forbes, GIZMODO, TechCrunch, and many other well-known publications.
At Selleo, we will guide you at all steps. We will listen to your requirements, analyze your goals and suggest platforms and languages to build complete ERP software with.
Step # 3: Selecting the Prototype
If you are going with an outsource development team, they will help you create a visual draft. The draft should establish the preliminary plan of the system. It implies working out what the company wants to develop and how they are going to use it. It is crucial to identify whether they are preparing a straightforward and simple project or a long-term project to predict effective and successful system delivery.
The development team should identify the ERP solution’s key modules that focus on various crucial business processes. It is imperative for the outsource development team to know what enterprise resource planning modules are the most important and which ones could benefit the organization.
Step # 4: Select the Method of Deployment
After narrowing down the ERP system's key modules, the development team will help the company decide the best deployment method, either they want to go with on-premises or cloud?
- On-premises ERP solutions are usually installed on the company servers.
- Cloud-based ERP solutions are usually installed and managed off-site by a third-party cloud provider and accessed through the internet connection.
According to industry research, 60 - 70% of all software, services, and technology are cloud-based by 2020.
Although cloud computing is becoming more mainstream, more secure, more reliable, it may not be the best option for your business. It all depends on the company structure, its existing IT infrastructure, internal IT staff, company’s growth expectations, business values, etc.
That’s why it is essential to identify the company’s wants and needs first by asking the right questions and conducting detailed research.
Step # 5: Find out the Cost
It is not an easy job to compare the price of the ERP solution. Implementing an ERP solution cost ranges from $25.000 to $350.000 or more if you want to build a custom one.
Another critical point for the stakeholders and business leaders to understand that the project cost depends on the number of modules, their complexity, and unique business requirements.
If you have an in-house dev team, it is easy to calculate the ERP software development cost. Otherwise, you should contact your tech partner to know the cost. The final cost can be calculated on the precise estimation. The ERP development price varies from $50/hour in Eastern Europe to $250/hour in the US.
Step # 6: Develop and Test
The development team has everything they need from UI/UX, modules, deployment method to features. When building ERP from scratch, you need to test the product at every phase of the development cycle, especially if you have outsourced the development. Your in-house development team should have several QA engineers to test the system. They test the system to find and fix all the bugs.
The better approach is to involve employees in testing ERP software. They’re the best beta-testers who would tell you the weak sides of the system.
What should be the Key Feature of ERP Software?
In software development, there is a rule called ‘KISS rule’, which stands for “Keep It Simple, Stupid.” At Selleo, we follow this rule religiously.
The development team should be more focused on the process and user experience. Keep your ERP system less-crowded and straightforward. Data-management and the data-collecting process should be fast and straightforward. Users should not waste their time thinking about what to type or pick from the menu to do their job.
The simpler the interface, the easier it would be for the employees to use it.
If you need assistance to build a custom ERP for your organization, you can contact us.