Custom ERP: features, development roadmap, costs & benefits

August 3, 2023

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Custom ERP

Head of ERP Center of Excellence

Custom ERP is an enterprise resource planning platform built from the ground up to meet the business needs, goals, and industry-specific requirements of a particular company. With a tailored set of functional modules and integrations, custom ERP are more flexible and easier to adopt and scale.

ERP software is a robust tool that helps companies achieve real-time visibility in business processes, increase operational efficiency, and ensure cross-organizational data integrity, sharing, and collaboration. However, not every ERP platform can effectively address your business needs. Moreover, there are cases when none of the current off-the-shelf enterprise resource planning systems can offer the capabilities you seek. That’s when a company turns to ERP software development services for custom-built solutions with features tailored to their business workflows.

Why go for a custom ERP solution?

The choice between building a custom ERP system or implementing a one-size-fits-all solution, such as NetSuite or SAP, should only be dictated by the company's specific needs.

Here are some weighty reasons for building your own ERP system:

Out-of-the-box functionality of packaged ERP software covers less than 70%-80% of your solution scope due to the established non-trivial business workflows.
You cannot scale and adjust an off-the-shelf ERP software solution (e.g., add new users, add industry-specific or advanced functionality, such as real-time data analysis or interactive visualization) as your business grows or transforms due to the platform's limitations.
You cannot smoothly and cost-efficiently integrate the existing packaged ERP software with necessary systems, including legacy management systems.
ERP subscriptions are based on the business process coverage and/or number of users, and the TCO of the off-the-shelf solution increases as your company grows.
Data security and data governance capabilities suggested by off-the-shelf ERP software are insufficient to meet global, country- and industry-specific compliance requirements.
Regular and on-demand software upgrades and updates performed by your ERP vendor disrupt your business processes.
User resistance caused by an unfamiliar off-the-shelf solution can require additional investments in end-user training and onboarding.

Wonder if custom ERP is an optimal choice for your business?

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Custom ERP vs platform ERP

Custom ERP software

Off-the-shelf ERP software

Functionality

Tailor-made functionality and integrations, as the software is built for a specific company

A predefined functional structure that could be excessive or insufficient for your business needs

Ease of adoption

Adoption is faster as the solution aligns with your business processes

The company might need more time learning how to use and tune the ERP system to take full advantage of it

Deployment speed

Deployment is slow due to the time spent on the project team assembling, solution architecture design, tech stack selection, development, testing, and deployment

Fast deployment for small or medium companies Deployment among enterprises can be slowed down due to the need to customize the ERP system to a company’s complex workflows at the source code level

Customization capabilities

Vast customization capabilities

Little to no customization capabilities

Scalability

Scalability can be adjusted to the in-house infrastructure

Scalability may be limited Upscaling results in higher TCO

Control over ERP

Complete control over the solution’s development and management, full ownership over the system

Little to no control over the solution

Support

Upgrades and maintenance activities are performed by the in-house team or are negotiated with the development vendor

Commonly, first-line support is included in the subscription fee Advanced and premium support plans are available for an extra fee

Cost

High upfront costs due to development expenses TCO may be lower in the long run The pricing is transparent

Low entrance price Expensive customizations and advanced support May imply hidden costs (for security, maintenance, upgrades, etc.) ERP vendors mostly offer software for a subscription fee, which can change over time

Major risks

Heavy resource investment Outdated technology Maintenance burden

Vendor lock-ins Functionality gaps Hefty pricing in the long-run

Deployment

Complete flexibility on how and where the software runs

Deployment inflexibility, the company has to factor in deployment models (cloud-based, on-premises, or hybrid) when selecting an ERP vendor

Custom ERP functionality

Tailored ERP functionality

Custom ERP can include multiple tailor-made modules supporting particular business processes. The combination of these modules, their number, capabilities, and types depend on the industry-specific requirements, business needs, and optimization goals of a particular company. Among the most common ERP modules are:

Financial management
Sales and distribution
Business intelligence and reporting
Warehouse and inventory management
Supply chain management

Field services
Quality management
Human resource management and payroll
Project management

Custom ERP integrations

Unlike off-the-shelf ERP solutions, custom ERP software has almost unlimited integration flexibility. With a seamless bi-directional data flow between ERP modules as well as between the ERP software and other corporate and/or external systems and SaaS applications, companies automate and streamline manual and error-prone data extraction and input activities, which increases overall reporting accuracy and speed. Among the systems custom ERP software can be integrated with are:

Hardware
Mobile devices
Software of our customer's partners/clients
Banking and financial services

Business process management (BPM) software
Ecommerce platforms
Accounting software
Customer relationship management (CRM) software

Custom ERP technology stack

For convenience, the following architectural levels can be distinguished:

Data storage for storing the data about each area of business activity
Back-end services including business logic, data processing, and integrations
A user interface for users to form requests and access information

From this perspective, the technologies used to build custom ERP software can be grouped into front-end, back-end, and databases, which can be deployed either in the cloud or on-premises. Some commonly used technologies are:

Front-end technologies

Back-end services

Databases

Custom ERP software development roadmap

1

Analysis

ERP business needs analysis
Industry regulations and compliance requirements definition
Technology environment evaluation
Goals and expectations for a new system elicitation
ERP software requirements specification

2

Design and technology selection

ERP solution conceptualization
ERP solution architecture design
ERP integration scope definition
Choosing an optimal technology stack

3

Planning

Project scope, deliverables, implementation strategy definition
Projects scheduling and budgeting
Data migration strategy development
User onboarding planning
Risk management strategy development

4

Development

Front-end and back-end development
Platform integration using custom code, pre-built connectors, or APIs

5

Testing

Functional and security testing
Usability testing with focus groups
Performance testing
Compatibility testing
Bugs and issues resolution

6

Deployment and launch

ERP solution deployment to production
Data migration from corporate systems and applications to the ERP platform
User acceptance testing to check the ERP system in real-world circumstances
User training and onboarding

7

Post-launch support (L1-L3 support)

Platform users support
Platform infrastructure support
System fine-tuning following customer’s concerns or suggestions
System troubleshooting
Technology upgrades

Cost factors of custom ERP solutions

To calculate the cost of building a custom ERP application, you have to factor in:

Functional scope

how many workflows a solution can cover; the number of functional modules (financial management, supply chain management, sales and distribution, procurement, order management, etc.)

Integration capacity

the number of integrations with internal and external systems, pre-built connectors for future integrations, the openness of the solution’s architecture

Data management activities

data cleansing, reformatting, and migration activities

Technology stack

the cost of third-party solutions used to build an ERP platform, licensing fees for storage and computing, and hardware-related costs

Team composition and team size

a standard team composition includes a project manager, a business analyst, UX/UI designers, solution architect, back-end/front-end/full-stack developers, QA engineers, and a DevOps engineer

Training activities

training sessions and support documentation/materials/manuals for end-users

Support level

any maintenance activities to ensure the smooth operation of the software, regular updates and upgrades, and user support

Client spotlight

21%

increase in sales

A furniture manufacturing software suit

Itransition developed a manufacturing software suite, including a custom ERP, which helped a furniture producer transform their back-office workflows and expand their business.

7x

shipments increase

A supply chain management ecosystem

Itransition optimized and upgraded the customer’s ERP platform for large retailers with new features, which helped to increase the average number of shipments for end clients, positively affecting their satisfaction rate.

Custom ERP benefits

Tailored functionality

Custom ERP adheres to all your business requirements. You can choose your ERP system’s environment, programming languages, features, and integrations. As your ERP mirrors your business operations, there is no risk of overpaying for unnecessary functionality.

High utilization rate

As the ERP platform was designed following your functional and non-functional requirements, with proper documentation and comprehensive user onboarding, the platform is much easier to learn and use and promises tailored user experience.

Flexibility

A custom ERP solution can seamlessly adapt as your workflows, user base, and business needs and requirements change. The development team scales and adjusts the solution accordingly.

Optimized TCO

Being tailored to a company’s specific business processes, custom ERP promises higher productivity and efficiency, and as it entails no subscription fees, the TCO will be lower in the long run compared to packaged solutions.

Product ownership and fast issue resolution

With custom ERP software you do not have to wait for updates or bug fixes from the vendor, as your support team performs any changes or maintenance activities once a need arises, minimizing the risks of business process disruption.

Higher security levels

Custom ERP systems are built following the company's specific security needs and compliance requirements. You can include advanced functionality such as end-to-end data encryption, authorization controls, multifactor authentication, and compliance management, which is not always available in ready-to-use solutions by default.

Common risks of adopting custom ERP

Custom enterprise resource planning is a valuable IT asset, so building it is a complex process fraught with potential barriers. To create a high-quality custom ERP, beware of the following:

Heavy initial investment

Custom ERPs are usually associated with a higher price because of the heavy initial investment for the hardware, software, and human resources required to build the system. In this scenario, sticking to a third-party solution may initially seem cheaper. However, as your business scales, you will be charged more for a larger number of users, new functional modules, and integrations. Thus, building a personalized ERP solution can be more cost-effective in the long run.

Extended timeline and insufficient resources

With custom ERP solutions, you must assemble a team, create a business logic, design the solution's architecture, draw up the technology stack, and develop, test, and deploy the software. The more complex your business workflows are, the more time you need. Additionally, poor project management can incur delays and increased costs. Custom ERP development also requires excellent technical expertise and a niche skillset, which becomes a roadblock. However, with ready-to-use ERP software, once you’ve chosen and configured it and paid a license fee, you are ready to do business.

Vague functional scope

When building an enterprise resource planning solution, you can be tempted to stuff the ERP system with all possible capabilities. To avoid ending up with a boundless functional scope, we recommend you start by interviewing your critical stakeholders for their requirements and expectations for the system. Then, elaborate and split all the elicited requirements into groups, for example, 'must-have,' 'beneficial,' and 'nice to have,' to make sure that the first two groups lay the solution's foundation.

Finding the right technology partner

An experienced ERP partner helps ensure that your ERP solution mirrors your business processes, is implemented within the time and budget, and has high ROI and adoption rates. When choosing an ERP consultant, check if it has a strict and proven ERP development process, a portfolio with an ERP implementation for companies similar to yours (same industry, size, tech maturity, etc.), and a deep understanding of your business, strategic goals, and needs.

Ensure the success of your ERP project with Itransition

Custom ERP is an expensive endeavor. Many companies do not opt for it for fear that their investments will not pay off because of the frequent technological changes. To create a long-lasting custom ERP system, we recommend getting a comprehensive ERP strategy carefully mapped to your business development strategy in the first place. Being a transformative technology for any company, an ERP solution is not an endpoint but the next step to automation and digital transformation. To execute it safely and achieve your objectives as quickly as possible, you can rely on Itransition’s certified ERP consultants.

Looking for a reliable ERP technology partner?

Custom ERP FAQs

What is custom ERP?

Custom ERP is an enterprise resource planning software designed and developed for a particular company.

How long does it take to develop an ERP?

Custom ERP development timeline depends on the project complexity, any ballpark estimates are possible after the analysis of specific business needs. Contact our consultants to get a quote.

How much does it cost to build a custom ERP solution?

Custom ERP implementation cost for a midsized company usually starts from $1mln depending on industry requirements, existing processes and technologies, specific business needs, the number of users, and training needs. If you want to learn how much your ERP project will cost you, turn to our consultants.

What technologies are used to build for custom ERP?

The technology stack used to build custom ERP software varies depending on a company's specific needs and objectives. Traditionally, custom ERP technologies are grouped into front-end, back-end technologies, and databases.

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