Whether you’re a large corporation, a small business, or a startup, custom ERP software is worthwhile to adopt. There is a widespread misconception that ERP systems necessitate complex workstations, servers, and other expensive technology, and that only large corporations can fully utilise them. Modern software trends, on the other hand, suggest differently. Because of the increasing popularity of SaaS solutions, even small and medium-sized organisations can offer to buy or construct an ERP system. Fortunately, the adaptability of such software allows for the customization of modules as well as the overall level of system complexity. As a result, businesses of all sizes will benefit from it.
An ERP system for a small business does not have to be as complex as one for a large corporation, but it is still a powerful tool that can help your company develop and automate .
Among the benefits of installing custom ERP software are the automation of multiple procedures and the correctness of recorded data. People no longer have to deal with manual data entry using ERP software, which reduces human errors.
Thus, no matter what the size of your business is. If you’re willing to optimize your business processes, this article is for you. We’ll describe everything you need to know about custom ERP software development.
Let’s begin with a definition. ERP is an abbreviation for enterprise resource planning. An ERP system is a powerful tool. Its primary goal is to automate most company procedures and improve inter-departmental communication. There are several additional functions that custom ERP software is expected to perform. We’ll go through them in more detail later in the article.
An ERP system is similar to a large database in which all of a company’s data is stored and readily controlled and analysed. As a result, each department has access to it. Of course, there are roles, permissions, and various levels of access. Nonetheless, one of the primary purposes of such a system is to provide maximum visibility to team members and improve cross-functional collaboration.
What Does an ERP System Do?
Numerous business processes are going inside one company, and sometimes it is difficult to control them individually fully and how they interact. The more separate and big different departments are, the more difficult it is to establish an effective workflow. By implementing a custom ERP system, you create a coherent ecosystem where all units are connected, and the collaboration between them is as easy as possible. Thus, the main goal of ERP software is to unite all business processes within one system and make them operate as a single mechanism
To achieve this synergy, an ERP system uses modules. Each of them is aimed at improving a specific performance area. Many of them eventually come down to three main categories: human resources, assets, and sales. Thus, the main ERP modules are:
- Human resource management
- Customer relationship management
- Financial management
- Sales and marketing
- Supply chain management
These modules actively interact with each other. For example, the HR component stores information about the list of employees and their vacations. At the same time, payroll, which is a part of the financial management module, takes that data from HR, calculates the amount of hours/days worked, vacations, sick leaves, and enrolls the salary paychecks at the end of the month to the banking system. Another example of modules’ interaction is sales, SCM and manufacturing. They all aim at tracking demand and dealing with logistics. So, the SCM module takes the data about raw materials from manufacturing, coordinates the logistics, and conveys the info to the sales module, which focuses more on delivering the final product to the customers.
You can customize the number of modules whether you’re deploying an out-of-the-box system or building custom ERP software. However, in the last case, you have much broader opportunities in setting up the system according to your specific needs.
OFF-THE-SHELF VS. CUSTOM ERP SOFTWARE
When you’ve decided on investing in an ERP system, you need to figure which option to choose: custom ERP software development or buying an out-of-the-box solution. Each option has its pros and cons, so let’s look into them.
Custom development is always a reasonable choice no matter what kind of software we’re talking about. Bespoke solutions invariably win over ready-made ones for numerous reasons. However, it might be pricey, and it is the most common reason why startups and middle-sized businesses turn down this option.
As you know, enterprise resource planning solutions are complex. Thus, deciding to invest in custom ERP software development is a significant step that you should take after thorough consideration. But, to provide you with a clear picture, we’ll discuss both options.
Off-the-shelf ERP system
You can find various ready-made ERP solutions. Many of them had years to establish themselves well on the market. The most popular ones are SAP ERP and Oracle ERP Cloud. In the picture below you can see more information about the market division between the ERP vendors:
Huge trusted companies developed them, but it doesn’t deny their most significant disadvantage against custom ERP software – bespoke solutions’ main strength of being built from the ground according to client’s needs. No matter how hard those who develop ready-made ERPs try to achieve it, they can never catch up with the custom solutions on this criterion. Off-the-shelf applications usually have a modular structure, allowing users to work with inventory, payments, human resources, etc. However, these modules may still not cover all the needs, or otherwise, be excessive. Therefore, the team will have to spend more time learning how to use the ERP system and tuning it before taking full advantage of it. It mitigates the only advantage of ready-made ERP products. Adjusting out-of-the-box ERP still takes less time and money, but close enough to what’s needed to build everything from scratch.
While speaking of custom ERP application development, the team spends a great deal of time on the discovery. During this stage, you work with business analysts to find out what modules and features you’ll need. Though, you save this time by opting for an out-of-the-box solution (but spend it later on adjusting the system to your needs). Thus, deployment is another controversial question. It makes sense for a small or medium company to expect fast deployment of an out-of-the-shelf ERP solution, but enterprises may face various challenges with it due to the complex workflows. In the process of deployment, big companies often have to resort to modifying the source code and work with APIs.
Sometimes, ready-made ERPs’ biggest strength can become their biggest weakness. If the number of adjustments and unique relations becomes too big – implementation can take more money and time than custom ERP development. Not to mention regular maintenance, support, and licensing costs associated with software products on the subscription model.
Usually, ready-to-use ERP systems offer two pricing models: subscription and one-time license payment. SaaS solutions providers use subscriptions, and those who provide on-premise ERP software opt for licenses. Subscription is usually paid per user monthly or yearly, and the license is a one-time initial payment. In the second case, you practically own the program. But the downside is that you have to deal with all occurred problems yourself and settle for the original version of the software as the license does not include support and updates. However, if you face some issues, remember that many people use this software so that you can find some answers in the community.
At first, when you see the $100 monthly price, it might seem very budget-friendly. It is a price per user, and for an average company with 100 employees, it will result in $10k monthly, which is $120k per year. To compare, it is an average price for a simple custom ERP application development. But, in the case of bespoke software, this money is only paid once.
An inevitable advantage of out-of-the-box ERP software is that you know what to expect from using it. Many people have already implemented it and given their feedback. Thus, you can find out information about its performance, scalability, and other technical aspects before investing in it.
To summarize, among the advantages of the off-the-shelf ERP systems there are:
- Proven quality
- Community support
- Lower upfront costs
- Relatively fast deployment (in case of small and medium-sized companies)
The drawbacks of ready-to-use systems are:
- Difficult integration for enterprises
- Expensive license
- Little to no customization opportunities
- Excessive functionality, which is not easy to remove
- Lack of specific modules or features
CUSTOM ERP SOFTWARE DEVELOPMENT
If you’ve eventually decided on custom ERP software development, we suggest you the precise description of the development of enterprise resource planning systems. Let’s start with the key functionality.
Core ERP Modules
Defining a future app’s features and modules is one of the most critical processes. A custom ERP system offers a broad set of modules, but you need to know which ones are crucial for your business. Specialists will help you with it during the development process’s discovery stage, which will be described later. And now, let’s look at all possible module options, so you can see the whole picture
Business intelligence. Data disunity is a considerable threat to business efficiency. Without a single system that connects the information from different departments, analyses, and reports it, you’ll have to spend a lot of time doing it manually. The business intelligence module, which is practically a combination of integration, analysis, and reporting modules, solves this problem. It forms dashboards formed on all business processes. They include analyzed data and reports, which allow you to estimate the company’s performance and provide you with real-time visibility and transparency. Besides, a business intelligence module has a forecasting ability. It generates some feasible projections on sales, time management, and others.
Automation. It is one of the main features of an ERP system. The possibility to automate all repetitive processes and those that require a lot of manual entry saves very much time and allows employees to focus on high-priority tasks instead. The automation module implies various functions that vary depending on the department. It can be forming invoices, payroll reports, etc.
Accounting. Companies of any size must organize their budget wisely. It requires thorough planning and tracking, which is difficult for financial leaders. The accounting ERP module makes this task easier for them by gathering financial information from all departments in one suite. This module helps to control all economic activities. It has a wide range of functions, including managing assets, payrolls, receivables, payables, general ledger, and conducting the analysis based on gathered data. Accounting may also include a supply chain management submodule. Apart from financial workflows, it is responsible for logistics and distribution.
CRM. The customer relationship management module is tightly connected with marketing and sales. But its primary goal is to increase customer retention and make communication with them more efficient. CRM modules keep the data about clients in one database. It includes names, contacts, purchase order history, their preferences, etc. What makes CRM an even more efficient tool is the integration with the sales module. It results in the possibility to also work with inquiries, invoices, and other order data. Acquiring clarity about the customers allows building more lasting relationships with them and positively impacts the company’s workflows in general.
HR. The human resources module is designed to manage employees and everything related to them. We can divide all its features into such groups: recruitment, time management, personal information, and payroll. Each submodule has a set of features that help HR managers do their job faster and more efficiently. HR module is an extensive database where such information is stored: personal data, working schedule, onboarding, paycheck reports, efficiency metrics, compensations, retirements, skill management, etc. Apart from keeping employees’ data, this module integrates with others, such as accounting, analytics, or reporting.
Marketing. The marketing module is tightly integrated with others, including sales, CRM, and business intelligence. This is due to marketing’s versatility, including communication with customers and employees, advertisement creation, performance, surveys, and competitor analysis. As the integration of a marketing module with others is essential, its functionality may resemble an existing one. Its main features include analysis of customer engagement, performance, advertisement planning, promotion tactics, sales forecasts, and reports.
Manufacturing. Initially, ERP systems were primarily used in manufacturing. That’s why this module is the most established one. It provides the opportunity to optimize all processes related to material purchasing, storage, and distribution. An inventory component regulates the procurement and selling of raw materials and optimizes their stockpiling. A sourcing submodule helps rationalize the expenses and avoid buying the substandard materials by keeping the data about previous purchases and each raw material. And the integration with the SCM module helps to reduce delivery time and cut down unnecessary expenses
ERP Software Development Services
When you’ve decided in favor of custom ERP software development, you likely want to know more about the development process. So, we’ll describe what steps it takes to build a quality custom ERP system that meets all your expectations.
We can divide the development process into such stages:
Let’s look more closely at them. The discovery stage is essential because the team forms a detailed understanding of the product during it. It allows specialists to save a significant amount of time later on. At this point, people who are most involved in the process are a project manager, a product owner, a business analyst, and designers. They all work coherently to make the follow-up steps easier to perform by forming the deliverables, including wireframes or mockups and a software requirement specification document.
For a medium complexity project, discovery takes about 8 weeks.
As the SRS document explicitly describes the application logic, once it’s ready, designers have all the knowledge to start doing the visual design and, in particular, creating mockups. A mockup is a screen layout with the minor details already designed. It provides the possibility to see the app’s workflow. However, only prototypes simulate the actual app’s behavior, while mockups just show its appearance. Usually, designers spend about 6 weeks to get the work done, but the number may vary depending on the complexity of ERP mobile application development.
The development stage is the longest one and includes an immense amount of work. At this point, programmers do the coding according to the chosen SDLC model. For example, there are many of them: Waterfall, Iterative, V-shaped, Agile, and others. The last one is the most popular and effective due to its flexibility. IT allows amending to the code right in the middle of the process, so in case if a customer wants to change anything, he doesn’t have to wait for the next iteration to start. Thus, Agile not only saves time but also results in improved customer relationships. Usually, specialists determine the timeframes at the discovery stage, so programmers follow pre-defined deadlines. Development may take from 20 to 30 weeks for a medium project.
After the development, the QA team starts their job. Some unexpected bugs are inevitable even after the launch, but QA engineers do their best to reduce this potential. The testing stage typically lasts 2 weeks or less.
The support, maintenance, and updates stage doesn’t have timeframes. It goes on for years after the app is available for use. At first, clients need ERP software development services provider’s help quite often because many minor faults become visible only in actual app use. After this, a service provider and a client get in touch when it’s time for updates or a customer has some concerns or suggestions.