Enterprise resource planning (ERP) is fundamental to any business. Whatever the size of your company or the industry you’re in, the right ERP sets the foundation for your future success.
Running your own business offers the opportunity to make your own decisions and implement your vision. It’s your chance to realize a vision, plan your growth and test different ways of reaching your target market. In most cases, you also get the chance to work alongside people who share your vision and your commitment. While you take responsibility for your mistakes, you’re also getting credit for how well you implement that vision. It’s exciting, but it’s also full of risk.
Poor Planning Dooms Businesses
The brutal fact is that many businesses fail. Consider these statistics:
- Around 21% of new businesses fail in the first year, and 50% fail by the fifth year.
- Only 30% of companies make it to year 10.
- Business owners who are under 30 are more likely to fail.
Why do businesses fail? The top reasons are lack of capital and poor management. If you haven’t looked closely at your ERP, poor management could put your business at risk.
What Is ERP?
The term ERP refers to any software that manages your business. This software might be web-based, or it might work through a mobile app that incorporates many distinct functions. You can buy premade ERP solutions that come in a one-size-fits-all package, but there are good reasons to consider ERP software development that’s designed just for your business.
Pros of a Custom System
Once you realize how important ERP software is, you’re ready to consider the advantages of a custom software package.
One of the main benefits of ERP software development is the ability to design your own package. A custom system considers the needs of your customers and employees. It aligns with your business goals and solves your specific problems. You buy only what you need and leave out the rest. With a minimum privilege design, every department will get access to only the modules they need.
No workflow interruption
A custom system won’t replace your current system, so it’s easier for your employees to make the switch. You won’t have to grind your business operations to a halt while you implement new processes and train your employees in using them.
With ERP development, your employees get the functions they need and don’t have to worry about the rest. Many businesses suffer from information overload, and employees can get overwhelmed having to use each other’s processes. Isolate each department or function’s tasks by giving them their own module.
Ease of implementation and learning
A custom software package designed for your business may not make sense to another business, but it works for you. Your employees will have an easy time understanding the concepts and processes they’re already using.
When you buy premade ERP software, you have no idea how it’s going to work or what bugs it has. Running into problems later might be an unwelcome surprise. Worse yet, getting them fixed is time-consuming and costly. With a custom software solution, your developers know the software inside out. They’ve already tested it for bugs and can fix problems quickly at little cost.
No matter how good the third-party software is, it wasn’t designed specifically for your business needs. Only a custom software developer can create a system that works with your business, your customers and your employees. Your business has a unique vision, goals, needs and challenges. Your software should address them all.
Updates and security
With a custom software package, your in-house IT team can easily make needed security and other updates.
Disadvantages of a Custom System
It’s only fair to talk about the other side. A custom package has many advantages, but it also has unique disadvantages.
The cost of ERP software development is the biggest obstacle for most business owners. It is easier and more affordable to buy a prebuilt, third-party software package that you can buy anywhere. In many cases, however, this is a false economy. With a custom package, you are paying for more than software. You’re also paying for a flexible, convenient, easy-to-use system that won’t interrupt your operations. Eventually, a custom ERP development will save time and money.
It takes an investment of time and effort to work with a custom software developer. Software engineers must understand what your business needs, design the program and test it. This takes time. On the other hand, you won’t be spending time training your employees to use new processes.
Finding a reliable contractor
It can be difficult to find an experienced software developer who’s an expert in ERP software. If you are under a tight deadline, it’s a good idea to start looking for the right tech partner at once.
Third-Party vs. Custom Solutions: How Do They Compare?
You may agree that a custom solution is better, but you’re not quite ready to invest in one yet. What are your best options for third-party solutions? Here are some software packages that are excellent options for any business owner.
These are subscription-based services with varying pricing structures.
This is a top choice for accounting firms, tax preparation companies and anyone else who needs to crunch a lot of numbers. It has a full selection of reporting and accounting functions, and it’s expandable. You can add features as your business needs grow. It comes with a pricing calculator that lets you figure out how much the software will cost your company. Cost: Pricing starts at $9,000 a year for each user.
A leading ERP brand, SAP has robust, flexible modules you can adapt to fit your business processes. While not as flexible or adaptable as a custom ERP solution, Sap is one of the most versatile ERP packages available. It is also an excellent choice for business owners who are new to ERP and other types of business management. It comes with a built-in tutorial that will walk you through setup and training. Cost: Prices start at $420 monthly for each user.
This Oracle product is popular with large companies. It combines outstanding accounting functions with all the standard business operations functions. Oracle can adapt itself to many industries and businesses. Cost: A basic license costs $999 a month plus $99 monthly for each user.
Note that these products have a yearly subscription license and charge more for each user. Depending on how many users have access to the package, you may find that the cost is not much lower than getting a custom solution.
While third-party software is limited by the design of its developers, a custom solution has unlimited options. When you buy a prebuilt platform, you get what it comes with. When you work with a tech partner to create a tailored platform, you start from a blank slate. You can customize your accounting, inventory, shipping or marketing functions in ways that make the most sense for your business.
With ERP development, you don’t get any features you don’t need. You only get what works for you, and you get functions that integrate seamlessly with your current system. Having a clear idea of what you need is a good place to start when you meet with a developer.
During the software development process, your tech partner develops a deep understanding of your goals, vision and business needs. Your software consultant develops documentation that guides the implementation and use of your software. If you hire a company to develop your custom software, the process includes technical writing, documentation and training. Getting new employees on board is easier with a custom package.
The cost of ERP software development varies among tech consultants. It also depends on the pricing model you use and the number of functions you want. There is no way to give a definite, fixed price on a tailored, custom product.
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ERP Software Development Process
If you decide that a custom solution is best for you, you must be prepared for a lengthy, time-intensive project. This will pay off in the end with a superior product, but you must be prepared to put in time and effort. To get the best results, be sure you involve all your company stakeholders, including your accounting, marketing and IT departments.
The process can seem overwhelming when you first consider it. Like anything else, it’s easier to do once you understand each step. Here’s a breakdown of what you can expect.
1. Start with a clear idea
When you want a custom software solution, you should have a clear idea of what you need. Ask yourself:
- What functions do I need the most?
- Which features are most important?
- What is my most pressing business problem?
- How can software streamline my workflow?
Be prepared to talk about your company’s internal structure and your current systems. You’ll need to explain which processes will be included in the new software package.
2. Take design into account
Never overlook the importance of good design. Functions are critical in a software system, but the design is also key. The elements of user interface (UI) and user experience (UX) are what set great software apart from mediocre software. There is no point in investing in a software system that is slow, confusing or unpleasant for users.
Superior design starts with well-designed wireframes. Wireframes are like models of an app that show how it will look, where specific elements will go, and how users get access to the app. Working with business analysts and web designers, you will develop a first wireframe that gives you a good sense of the final product.
3. Choose a tech stack
The right tools are important when you’re building a house, and the same is true when you’re building software. When we work with clients, we recommend the same basic toolkit of tech products.
4. Integrate your current systems
Your current system probably involves many separate apps and software packages that all perform discrete functions. Before you choose a custom software developer, give your software development company access to your existing apps and databases. Doing so will make the new coding go faster.
Developing new apps is a complicated process that can eat up a lot of development time. By allowing your tech consultants access to your files, they will be several steps ahead in the process. They can use your legacy apps to reconfigure the new code, and this will save you time and money.
Your software development company relies on specific tools to ease this integration. Software packages like G Suite, Office 365, FreshBooks and others will combine easily with the new ERP system. Your software development team will also create application programming interfaces (API), which allow apps to talk with each other. Well-designed APIs are critical to software integration. They allow apps and systems to communicate easily and work together.
Existing apps and third-party integrations can entirely replace large modules in a custom package. For instance, your customer relations management (CRM) app may work well for you. If you’re a small or medium company, it would be costly and inefficient to build a new CRM from scratch. Using APIs to integrate your existing CRM with the new ERP will save time and money.
4. Test for quality
Quality assurance (QA) is another crucial element of building a new software system. Once again, we are talking about a complicated, time-consuming process that requires special expertise. QA can take place over several key stages.
Unit testing and system testing: Unit testing involves checking how well the new features work with other software modules. System testing involves checking how well the final system works and whether it meets your business requirements. Both these testing procedures must be done separately.
Functional testing: There are five types of functional and non-functional tests that a software developer must run.
Bugs: Every new piece of software must be free from bugs and defects before it can be released. A software developer knows the code thoroughly and can ensure it is clean and bug-free.
As you can see, QA and testing can easily eat up most of the time devoted to ERP development. However, this is a crucial step that should not be skipped or rushed. Your business may depend on it.
5. Run a review
The last step in the software development process is a full review of all systems. For a thorough check of the software, wait until the new system has been implemented and fully integrated with your current system. Here are the four steps to a full review.
- Does it meet your requirements? Does it supply the functionality, security and ease of use that you need?
- How functional is the ERP? Test it by performing accounting, marketing or other regular functions across different modules. Is it working as promised?
- Are your employees happy with it? Ask selected people in various departments to test how well different modules work with each other. For instance, sales and marketing may have many crossover functions. Ask the users of each function how well the new module is working.
- Check your security. We recommend running dynamic security tests with web application firewalls to find security gaps.
Cost of Custom ERP Software Development
Unlike a subscription-based third-party software package, custom software doesn’t come with a fixed price. The price depends on the scope of the project, number of functions, development of APIs and number of users. A small start-up with limited functions and only a few employees might pay $20,000 to $50,000, while an international firm with several offices and 100 employees might pay $250,000 to $500,000. The average cost for most of our mid-sized clients is from $100,00 to $250,000.
Whether your business is small or large, however, there are ways to control costs on a software development project.
Tips to predict and control expenses on an ERP project
Upgrade your systems.
An ERP needs substantial amounts of space, storage and computing power. If you’re trying to introduce a new ERP system into an outdated set up, start by upgrading your hardware and cloud storage system.
Make time for training.
Any new software system requires your employees to spend time training. Plan for a slowdown in business during this time.
Update your internal processes.
Good ERP systems automate many tasks, but you won’t notice a speed upgrade if you’re still using outdated processes. Adjust them to the faster speed and ease of a new ERP system.
Don’t forget hardware maintenance.
Hardware is just as important as software. Hardware and network elements require regular maintenance to continue working. Avoid system failures by hiring a consultant to inspect your network. If you use a cloud-based system, hire a technician to update it.
Make room for expansion.
If you add functions to your business, you may need to add modules to your custom ERP system. Changes to workflow or processes will also affect the software. Regular updates will keep your ERP in tune with your business growth.
Consider all users.
How many users will have access to the software? When you get custom software, you don’t have to pay a monthly user fee. With a subscription service, you typically pay a minimum $400 monthly fee for each user.
Focus on what you need.
When you begin the ERP development process, you can save time by having a clear idea of what you need. Talk to your in-house IT team first. Get a clear idea of the apps and software modules that are most important. Leaving out modules you don’t really need can help you lower the overall price.
When you talk to ERP software developers, ask them about their pricing models. Get detailed summaries of what they will provide and what the cost of each service will be.
Be flexible with location.
If you can be flexible about the geographic location of your provider, you may save considerable money. Web Design Sun is based in Ukraine, for instance, and our rates are often half the rates of companies based in the U.K. Those low rates come with high levels of technical ability and customer satisfaction.
Support and Maintenance Costs
Once your ERP is fully in place and functioning, regular updates are key. Maintenance and updates protect your investment in your business, but they are an added cost.
If you’re using a custom system designed for your business, you can assign an in-house person or your tech consultant to handle this maintenance. If you are using licensed software, you must pay an annual or monthly fee for support. This support covers integrations, hosting, new features and technical help.
There are ways to reduce the cost of maintenance.
Outsource the maintenance: You don’t need a full in-house IT team to handle your maintenance and updates. Outsourcing this step to a consultant is a more affordable option for most businesses.
Fully customize your system: A truly custom system requires fewer daily or monthly changes. It is already built to your specifications, and it doesn’t need constant tinkering to work correctly.
Ask for limited support: Most ERP maintenance packages come with a full suite of update and support functions. You may not need them all. Look closely at the maintenance package to see if there are things you can cover in-house.
Is Custom ERP Software Development Worth It?
Building your own ERP is a major investment in your business, and it is one with many advantages. You get a truly custom situation designed to address your specific problems.
How To Find the Right ERP Development Company
The right software development company is more than a team of faceless technicians. The right company is a business partner who works with you to develop innovative solutions. Integrating all your business functions into one platform is a time-consuming, complicated process, but it also has a tremendous payoff. The right software developer can make the process highly rewarding.
When you choose a partner in this process, look for:
- Experience and technical ability
- Excellent understanding of your business
- Commitment to helping you solve your problems
- Willingness to build a system that meets your requirements
- Proven record building similar systems
When you meet with a potential software developer, ask about their process. Discover how much time they expect to spend on planning, testing and updates. The right technology partner will be with you every step of the way.
Get a Custom Solution with Web Design Sun
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