ERP systems help businesses control their financial situation and the potential to invest in assets. There are 3 types of systems to choose from: custom ERP, commercial ERP, or a hybrid model.
An Enterprise Resource Planning (ERP) system is a life-changing tool that all companies should try. However, with all the out of the box ERP software, why would you be interested in customised ERP development? One of the reasons is cost-effectiveness. Let’s discuss it further and deeper. Continue reading this article until the end.
An Enterprise Resource Planning (ERP) system integrates different applications to automate various company branches and operations into a single database. An ERP system can manage the following:
- Human Resources
- Compliance monitoring
- Business intelligence
- Automated reports
Many companies have been quick to adopt ERP software due to its efficiency. By eliminating manual procedures and legacy applications from day-to-day work, companies can increase productivity, eliminate duplicate data, and ensure an extra layer of data integrity.
ERP systems also help businesses control their financial situation and their potential to invest in assets to discover new challenges. The integration of an ERP solution brings about improvements and other positive impacts on some or even all business processes.
Types of ERP Solutions
When deciding which ERP to buy, you can choose between the following three types:
- Fully customised software, also known as custom software. In this case, the development team you have selected will build an exclusive ERP system from scratch based on your wishes and requirements.
- Software that is already in the market, already made; also referred to as off-the-shelf software or commercial software, is a pre-built ERP software package.
- Hybrid model. You can choose the hybrid option when you already have an ERP solution but want to develop new modules.
To Customise or Not to Customise
Think of it this way: would you rather buy a frozen meal (which is probably okay too) or choose a meal from a five-star chef to create the most enticing meal with delicious ingredients of your choice?
Basically, the main difference between ERP solutions lies in the demands of the user and how complicated it is to integrate it with the company’s existing software. A customised ERP system can be created with all the features of your own choice.
In contrast, commercial off-the-shelf ERP cannot be easily customised. This often leads to companies needing to redesign their entire workflow to match the software. You can imagine how frustrating the adoption process might be since every business operates in its own, specialised way.
The hybrid model involves customising commercial software to customer specifications and can take advantage of the latest building blocks or no-code/low-code development environments to accelerate implementation. Each solution is effective and appropriate in its place and time. Therefore, you should weigh all the pros and cons to make the best decision.
Software Custom ERP
Here are some of the advantages of custom ERP software:
1. Cost Effectiveness
It is quite complicated for company leaders to decide which ERP to buy when considering the price, you should still think that the cost of ERP software should be evaluated in the long run. With customised solutions, there are higher initial costs. However, after development, you hardly need to spend money on anything on the system. In contrast, with an existing solution, you will constantly pay to use it. This makes customised ERP solutions very cost-effective for long-term use.
If you believe a customised system is what your business needs but you have doubts regarding the price, consider using the services of a freelance ERP development company. In general, freelance developers are more affordable and can build ERP software for an attractive price. This way you will get spectacular software without risking quality.
When you develop a custom ERP, you become the product owner. You get to choose what features and instruments you want to have. Programming environment, software structure, language, design – it’s all up to you. Also, you have full control over employee access to data. You can build a custom ERP step by step while conducting thorough testing at every level. This is a smart way to spread your budget evenly over development.
You can make your custom ERP system highly scalable and easy to integrate modules. That way, you can stay ahead of the competition in times of crisis or expansion and save time and money as well. Your business can adapt to market changes quickly and efficiently. You can also easily switch to another ERP system development company if your current one no longer fits your needs.
And since custom ERP software is specifically made to suit the demands of your business, it will definitely help you with increased revenue and a trustworthy user experience. Moreover, as your company’s demands increase, you will have the agility to fulfil them with a custom ERP solution – in short, by adding new functionalities whenever you want.
A plus point for customised ERP is that developers can design a custom ERP around your business area. During development, programmers concentrate on building the ERP system according to what the company needs: what they want the ERP to do and the processes it should follow to perform and facilitate operations.
Each custom ERP system is built to match and automate the company’s current processes and experience. An ERP system development company will take the time to get to know your business better. The result is a stable workflow, as custom ERP modules are created specifically to meet your business needs.
5. Easy to Integrate with Third-Party Services
Commercial tools offer many integration options. However, you cannot be sure that every third-party service can be added. By choosing customisable development, you ensure that any additional tools your company needs will be integrated into the system.
6. Customer Support
Users often complain about weak customer support. Unfortunately, even the best ERP companies have problems providing good quality support. Users detail situations where they are about to encounter a problem, and the support staff is rarely able to provide assistance or can’t answer all questions.
This can happen as long as the company cannot teach the support staff all the complexities of the ERP solution they offer. Therefore, when users have problems with the system, they cannot really rely on help. They have to find and hire expert ERP consultants to resolve the issues. This often happens during the implementation phase as the learning curve of ERP solutions can be high, leading to huge unplanned expenses.
When you have a custom-developed and implemented ERP, communication is more highly efficient. You communicate directly with the people who built your system, know your company and your business processes. Therefore, whenever a problem arises, the whole team starts working to solve it and provide better answers than the help desk employees.
Then here are some risks of custom ERP software:
1. Development Time
Since ERP systems cover all the work of a company, they are large and quite complicated. Therefore, the development time may be extensive to achieve a high-quality end product. After the initial stage of development is completed, ongoing support is also required. Professionals suggest continuous ERP system software development planning to ensure easy rollout.
However, you can gradually create modules per department and introduce a new ERP system into your workflow section by section. This is another way to develop software if you don’t want to wait for the entire system to be completed.
2. Cost Uncertainty
It is quite a tricky task to calculate the final price of custom ERP as it depends on the complexity of the demands and the overall complexity of the project. However, if you collaborate with an experienced software developer, they can help you set an approximate budget easily.
Software ERP commercial (Off-the-shelf ERP)
Here are some advantages of commercial off-the-shelf ERP software:
1. A Good Choice for Certain Companies
Commercial ERP software is good for businesses such as taxi services, small cafes, cleaning services, small shops, and delivery services. If your business is one of these businesses, you can benefit from a commercial ERP solution because your business structure and processes are typical.
Similar smaller companies often prefer commercial ERP systems because they don’t need too much customisation and are happy with the features offered. The all-time costs of a commercial ERP system are also simpler to establish upfront.
2. Quick to Use
If your company is not too big, you can implement commercial ERP software quickly. However, there will be some integration difficulties in some parts. In this case, your in-house developers can customise parts of the software, manipulating the source code and APIs. However, this can slow down the implementation.
Here are some risks of commercial off-the-shelf ERP software:
1. Limited Customisation and Functionality
Integrating a commercial ERP solution often means paying for the entire package, whether you ask for all the features or not. Along with that, making changes to a commercial ERP often requires a lot of resources. It takes hard work, a lot of time, and cash. So, you can start small and add the essentials as you go. However, you need to be sure that you can afford to make constant changes without disrupting daily business operations.
Commercial ERPs may not fulfil all business needs as they are built for large markets, not specific companies.
2. Cost and Integration
Licences for third-party ERP software can be very expensive. Some basic licences cost in the tens of millions of rupiah per month. Adopting an existing system can take longer and be more complicated than adopting a customised system as businesses have to adapt their processes to a commercial ERP system.
The hybrid model is for businesses whose needs fall between what custom ERP and commercial ERP solutions offer. Consider the hybrid model if you have the following situation:
- Your company can run efficiently with your existing ERP software and needs just a few additional features.
- Your company already has a custom ERP developed by your in-house team or a team of freelance developers and you want to add some modules.
Hybrid models are initially cheaper than fully customised software because many of the development tasks are already done. Therefore, you are not starting from scratch or the very beginning.
The implementation takes two weeks compared to months if it was a customised software or commercial business solution. And a lot of time is spent mapping out the process stages, users, rules, and specifications.
Does Your Company Really Need a Customised ERP?
To quickly establish whether your business really needs a custom ERP or not, here’s a list of issues that signal that you might need a customised system.
- Your current software tools don’t communicate with each other efficiently.
- Your ERP cannot generate customised reports.
- Users cannot access your software on mobile devices.
- You find it difficult to fulfil client requests.
- You don’t have a functional CRM system.
Complex and unconventional ideas can hardly be implemented using commercial software.
Custom ERP development can solve many business problems without creating new ones. Programmers can customise your ERP to your industry or market niche and adapt the workflow to your company. In today’s business environment, where the services and products of a company have to constantly compete in the market and need to stand out, a custom ERP system is one of the best tools to adopt.
The system will be individually designed to meet the company’s needs, wants, and processes. Moreover, a good custom ERP system can prepare the company for future challenges with its highly scalable capabilities.
Commercial systems, however, can be a great solution for smaller companies with typical business operations. If there is no commercial system that fits your business process, discuss a hybrid model with your software development company. It could be the right choice.
So again, it needs to be adjusted to the needs and scale of your company’s business to choose the right type of ERP system: custom ERP, commercial ERP, or hybrid model. If it suits your needs and through careful consideration, you can immediately choose the type of ERP system to be implemented so that your business can run more smoothly and better.