Custom ERP Software Development: Is It Worth It?
Most business organizations today are quickly adopting the use of custom ERP software solutions because as opposed to the common use of manual procedures and legacy applications, ERP programs are cost-effective and efficient. The Enterprise Resource Planning program is a system of integrated applications that are designed to automate different department/office operations (product planning, development, manufacturing, sales and marketing) to a single database.
Nevertheless, not all ERP software will meet to every requirement of your organization. Therefore, when deciding on the ERP software to adopt, you need to choose the most reliable one as far as your business needs and processes are concerned. In turn, here are the two types of ERP systems:
These are systems easy to implement due to the fact that they are developed out of the experience of other organizations (user groups) other than yours. From the discussions on how each of those companies’ best use the system, you acquire information on how best to adopt the system for your business.
Custom ERP software
With custom ERP, the system is developed based on your company’s experience. A programmer gets to design the ERP system in accordance what exactly you want the software to be able to do and ideally, the process it should follow in order to do perform and facilitate your operations.
WY COMPANIES CHOOSE CUSTOM ERP SOFTWARE
There is a greater chance of a company meeting its user requirements when it goes for custom-built ERP software other than a generic system solution. This is so despite the high upfront costs and time consumption to get the system started. You can always start small and add the essential layers as you go by and in the end meet, the target software for your business. Plus, it is also a way to spreading the initial expenses throughout.
Custom ERP software is also designed to fit your business processes instead of the business fitting into it, this is somehow relieving since as far as training of the company’s staff is concerned, there will be less of it. All they have to do is make little adjustments to coordinate with the system.
A good example of such approach is Tesla, who carefully evaluated all pros, cons, and risks and decided to build custom ERP solution having above mentioned benefits in mind. Tesla CIO Jay Vijayan calculated the costs of SAP implementation in “millions of dollars” and a year to perform all the required integrations. Tesla managed to achieve same functionality within 4 month and much lower budget with custom built ERP. As the result, they’ve got independence from third-party vendor and Enterprise Resource Planning System that is tailor-made for their established internal business and manufacturing processes.
HOW MUCH IT WOULD COST TO BUILD CUSTOM ERP SOFTWARE
It is obvious that the cost of custom ERP software development would depend on what you require, the number users and its complexity. For instance, if you are going for a sophisticated custom ERP system, you might not find complete designs that fulfill your needs. Therefore, you will have to incur extra cost for complimentary products to ensure the software fully functions.
Nevertheless, the general cost of the ERP system will range between $25k to 75k. The extra incurring costs for future modules or top-up services and tools would go for $5k to 25k.
RISKS OF DEVELOPING CUSTOM ERP SOFTWARE
The solutions and services that custom ERP software development is meant to provide, is usually not in box therefore, it requires a lot of time and finances to initialize the design resulting to high upfront fee.
Since development of a custom ERP software is on basis of your requirements, to get a high-quality system that maneuvers around future changes easily despite it being a first-time project, you require a developer with experience. Such resources are hard to come by as you are outsourcing.
In addition, your contact with the developer who initialed the system needs to be consistent. This is because they would understand the system better during the development cycle: design, testing, QA/ testing, and training. This may be hard to do especially if the developer is not reliable.
Despite that, custom ERP software helps to save an enormous amount of money in long-term perspective. You may ask how is that possible. Each company counts on continued growth, including the number of employees, field force, and offices. In many cases, a bigger number of users means the continually growing expenses for the licensed ERP solution. Enterprise support packages are often sold as extra services and are way more expensive than support from the custom software development provider whose support is often included in the contract. Also, it is worth to mention that your organization will be the only one supported for the product which means better and faster communication.
So, the expenses for the existing user licenses, new licenses, and support of the off-the-shelf solution is growing exponentially and completely overlap custom ERP software development costs in a couple of years. In its turn, custom ERP software will justify its high upfront costs, because your enterprise won’t be locked to the provider, will own the solution and all the data stored in the cloud as the result, and won’t pay for licenses when new user accounts will be needed.
CUSTOM ERP SOLUTIONS EXAMPLES IN DIFFERENT INDUSTRIES
From the advantages of the existence of a software that can meet your business requirements and solutions, most companies have been seen heading to custom ERP system development for the management of their operations. Below are a few of such companies:
Oil and Gas Companies
Oil and gas companies have a great plus with custom ERP software development but, it is usually a tragedy if the system does not support the operations efficiently. Therefore, when going for a tailored system for such a massive company more considerations are put in place other than the obvious; meeting the user needs.
Custom ERP software for gas and oil companies should most importantly have applications to handling the environment safety. Energy companies are known to be hazardous to their environment and if not taken care of it would cause damage and to some extent shutting down of the organization. Therefore, the system should be able to provide data to the technicians as warnings in case of any threat so that they can mitigate the risks.
Also, other than facilitating the operations of the company, a custom ERP software development should be able to open up opportunities for high profit returns investments for the business. That is, it should have a cost management application too.
Finally, oil and gas fields are known to be really massive and some are usually in dense remote areas but since it’s business, every asset should be accounted for. In turn, a custom ERP software with good networking is essential to integrating and managing all the company’s operations regardless of the location. Such location difficulties are curbed with high-tech optimization tools to managing all labor and resources throughout.
With manufacturing firms, custom ERP system are saviors when it comes to saving costs, eliminating office paperwork, tracking business performance and improving customer experience. This is made possible by integrated custom applications platforms for management of its operations.
Nevertheless, managing a national or to some extent international business operations can be a challenging task. A centralized custom ERP software can however, bring light to all your businesses processes as it enables management of creation of product, marketing and availing of the product across all the decentralized outlets. In addition, it integrates all that data thus incorporating workflow and control automatically.
Schools that are going for complete computerization of their functions and processes have custom ERP system development to opt for. A great number of schools have been seen heading to this direction with use of highly tailor-made programs to handle the school management and they are known to be very successful.
Whether it is nursery/ kindergarten, high school or colleges, custom ERP systems have proven to provide efficient management of the institutions.
WHAT ADVANTAGES WILL YOU GET IF DECIDE TO DEVELOP CUSTOM ERP
- A custom ERP software is more of a prototype system whereby you can start designing the most basic and important features and function that you have in mind then later, during testing and maintenance, you can add other essentials bringing you to a very efficient software.
- With a custom-tailored system, you are likely to achieve the solutions or attain the services you are going for from a software seamlessly.
- The staff is usually at an advantage of comprehending how the system works easily because it was designed in accordance to the business practices and language. In turn they have little to adjust on their side.
- Custom ERP systems are usually flexible in terms of future technological or even business changes. There is always a capacity for incorporating any developing trends.
- Unlike the offshore system, you get to own the custom ERP system and its design is made specifically to meet your needs. Therefore, you need not to wait for feature requests and enhancements as you are in complete control of the system.
In summary, the basic things you need in hand while planning to adopt custom ERP system is you have to budget for high upfront fees. You will require a team of tech-experts from programmers, quality controllers, database engineers to designers and probably more. Then there is patience needed too, developing software that uniquely fits your business, just like Rome cannot be built in a day. It will require a lot of work which will consume time months or even year.
In addition, you need to be fully aware of the company you have set your eyes on to work with because that would be a tragic decision as well as a blessing even before you start. The expertise, as well as a software development company’s stability, is very essential to check while assessing them. Have they done this before? Do they understand your business needs? Are the type of questions you should have answered before moving forward with them.