Custom ERP: features, development roadmap, costs & benefits
August 3, 2023
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?
Custom ERP vs platform ERP
Custom ERP software
Off-the-shelf ERP software
Functionality
Custom ERP software
Off-the-shelf ERP software
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
Custom ERP software
Off-the-shelf ERP software
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
Custom ERP software
Off-the-shelf ERP software
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
Custom ERP software
Off-the-shelf ERP software
Vast customization capabilities
Little to no customization capabilities
Scalability
Custom ERP software
Off-the-shelf ERP software
Scalability can be adjusted to the in-house infrastructure
Scalability may be limited Upscaling results in higher TCO
Control over ERP
Custom ERP software
Off-the-shelf ERP software
Complete control over the solution’s development and management, full ownership over the system
Little to no control over the solution
Support
Custom ERP software
Off-the-shelf ERP software
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
Custom ERP software
Off-the-shelf ERP software
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
Custom ERP software
Off-the-shelf ERP software
Heavy resource investment Outdated technology Maintenance burden
Vendor lock-ins Functionality gaps Hefty pricing in the long-run
Deployment
Custom ERP software
Off-the-shelf ERP software
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 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:
Custom ERP software development roadmap
1
Analysis
- ERP business needs analysisÂ
- 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 conceptualizationÂ
- ERP solution architecture designÂ
- ERP integration scope definition
- Choosing an optimal technology stack
3
Planning
- Project scope, deliverables, implementation strategy definitionÂ
- Projects scheduling and budgeting
- Data migration strategy development
- User onboarding planning
- Risk management strategy development
4
Development
- Front-end and back-end developmentÂ
- Platform integration using custom code, pre-built connectors, or APIs
5
Testing
- Functional and security testing
- Usability testing with focus groupsÂ
- Performance testing
- Compatibility testingÂ
- Bugs and issues resolution
6
Deployment and launch
- ERP solution deployment to productionÂ
- 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 supportÂ
- System fine-tuning following customer’s concerns or suggestions
- System troubleshootingÂ
- 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.
