Interested in building ERP from scratch? Read our latest blog post about the cost of an ERP development project with the detailed breakdown of the budget, timeline, and resources needed for such project.
Whenever an organization or individual approaches a developer with the need for an ERP system, he or she is given choices on how to acquire the system. There are two prominent ways of implementing ERP systems:
Off-the-shelf ERP solutions – this is the opposite of developing an ERP from scratch, instead boxed solutions such as SAP are purchased and are ready for use.
Custom ERP system development – it is a process in which the ERP system is built from the ground and in accordance with the needs of the client and the system requirements.
The first option is pretty obvious, but what if you feel that none of the available ERP systems would address your requirements or you just want to have complete ownership of the solution which will be your mission-critical businesses tool for the next decade or even longer? How to build an ERP from scratch? In this article, we will define the roadmap of how to build your own ERP system and address most frequent questions such as which technology to choose, how long it will take and how much does it cost.
Table of Content:
- How to approach custom ERP software development process
- The development process
- Timeframe and costs for such projects
Why choose to build a custom ERP system?
Off-the-shelf ERP system buying and customization will always seem cost-effective and time-saving as a result of less up-front fees as well as save the time taken in the development process. Despite these advantages, the quality of a system is what matters and developing an ERP system from scratch is more likely to meet the systems’ requirements and functionalities.
Is it worth to build custom ERP? We have already dealt with this question in our article dedicated to the advisability of building ERP from scratch. Read it if you want to learn more about that. The short answer is “Yes”.
HOW TO APPROACH CUSTOM ERP SOFTWARE DEVELOPMENT PROCESS
Custom ERP systems are more advantageous in delivering the proper needs of business operations but this is usually in addition to an organized and step by step development process. Custom ERP development is a procedural process that includes:
ERP development is an iterative process which always goes on as enterprises constantly need new modules and features.
1. Defining the project’s goals
This is the vision of the ERP development process. It is usually described by the client to the developer, he/she explains what the ERP system should deliver at the end of the development process. Eventually, the client and the IT experts should come to an agreement on what the end product’s functionality and features should be.
2. Developing a Blueprint and Wireframing
Just like in most operations, a blueprint acts as the basis of the whole process, therefore, it should be well detailed. The custom ERP system blueprint contains complete information of the development process, timeframe, and the resources to be used. It is a document created by every individual involved with the target ERP system. This includes the system developers (whether in-house or outsourced), organization managers, IT leaders, and at times the end user of the system. They are all essential in the creation of the master plan.
Wireframing involves stating the components involved in the custom ERP development process, is it the sales, HR, accounts, procurement and so on. This creates the foundation of which of the business operations and the data to be integrated with the system.
The most commonly implemented modules: Supply Chain Management, Resource Planning, HR Module, Financial Management and CRM.
When you start to think of how to build an ERP from scratch it is important to choose which type your custom ERP solution will be. Each choice has some advantages and disadvantages. Let’s make a list of the available options:
- Client/Server ERP will work locally on user’s computers and the database will be stored on your networking hardware.
- Web-based ERP solution will be running on the external web server and therefore can be accessed from any device in the simple web browser.
3. Technical part
This is the part where developers commence their work. It involves making a decision on the database, backend, frontend and the whole technical part of how to develop ERP software.
The stack of technologies such as framework and database is the foundation your custom ERP will be built on. Choosing the platforms, framework, and database is heavily influent blueprinting and wireframing stage. Actually, it is a two-edge sword, for example, you pick the framework depending on what goals you have chosen for the application, what level of security do you require etc. Caused by your choice of framework, you will have your ERP running locally on the user’s machine or accessed with the browser. It is all about the compromise and prioritization. If cross-platform compatibility is something that matters to you most of all then you have to go with Java, if the security comes first – then you are most likely to choose .NET as your primary framework.
Where the system is to be hosted
A customized ERP system can be hosted on your local servers or on the cloud. The decision on where to host the system is usually based on the enterprise finances and policies. Nevertheless, the cloud is a more advantageous host for an ERP system for the following reasons:
- It does not require extra staff to work on the systems as needed in maintenance of your own local server hardware
- Cloud provides better and guaranteed data security for the data.
- More affordable to small business as it requires less additional hardware, servers among other equipment.
- Flexible for a company whose users may grow in time as the cloud can be easily scaled.
All boxed ERP systems have cloud version. On-premise solutions have become less popular over past five years. In-house ERP running on the cloud can give you same benefits.
All the data in the previously used system is required to be transferred and integrated to the new database and in accordance with the appropriate departments.This involves the creation of tables with entities representing the different organization’s components and linking the tables to form an organized storage of information.
Implementation of applications
In addition, there are usually legacy canned applications that are used by the enterprise and are essential to their operations. The developers are required to consolidate the legacy applications to the ERP system or otherwise create new applications.
This involves writing codes to develop the new applications but in existence of the legacy applications, you can use similar components in the apps for re-configuring. A developer has a great deal of work as there are some important pieces of software to the enterprise that must be retained while some of them are vintage and require massive re-configuring.
Data from legacy CRM, Accounting, Project Management and Data Service applications frequently has to be migrated and consolidated to the newly-built custom ERP.
UX/ UI development
At this part developers majorly work with protocols to create presentation platforms for users of the ERP system. A developer has to create a front-end that will convert the data language to the user language as well as use XML for neutral dialects.
This is a part where the developers test the system to confirm that it meets the desired requirements. There are two steps to go about reviewing:
- The developers can feed the system specific data to test whether it meets its functionally and requirements.
- The development team can also release the system to a group of volunteering individuals who use the system as the targeted users would. This is a more comprehensive way of guaranteeing the system functionality, safety, and security.
Testing of the bespoke in-house ERP is a mission-critical stage of the implementation. ERP system is designed to make organization’s operations easier and efficient. On this stage, development team checks if the application is robust and comfortable to work with.
THE PROCESS OF DEVELOPING AN ERP FROM SCRATCH
Developing a custom ERP software involves complete practicality in customization and configuration of the software, database technology, ERP system environment among other technologies in play.
These include application, interface systems and other software. Developers re-configure legacy apps, develop and implement new applications. This requires developers with magnificent coding skills, who know how to make ERP, acquaintance with computer languages and configuring tools for a custom ERP system that fulfils the desired requirements.
Those are the technologies that most used as the foundation for enterprise ERP applications
An organization’s data is today their greatest asset therefore in development of a custom ERP system there should be affirmed validity, safety, and integrity of the database system. Developers have to be familiar with the available variety of database technology such as storage procedures and triggers. They are tasked with choosing the most suitable database technology for the company’s data, ERP system for easy data migration and transaction to the system.
The database is the most important part of the ERP application. Each database type has pros and cons. Knowing them will help you to make a right choice.
ERP system environment
Developers are faced with the challenge of evaluating whether the custom ERP software will facilitate the company’s growth over time; its flexibility to scale with changes in the business environment as well as technology and remain feasible and reliable in the long run.
The in-house ERP system platform should thus be of quality. It should be written in a modern and popular language, created by a certified development company and come in the documentation that the software will remain viable for a long term.
TIMEFRAME AND COSTS OF IN-HOUSE ERP DEVELOPMENT PROJECTS
Modularity and system functionality
The cost and timeframe of how to make ERP software are based on the number of modules and the expected functionality. A system that is to be frequently released as prototypes are more expensive due to the incurred cost and time taken to develop and implement the modules.
An in-house ERP system that has complex functionality is also likely to consume more finances and time as compared to a simple system. Sophisticated custom ERP software takes time to write codes for application, data integration, and migration. Also, extra costs are incurred due to unavailability of all designs for development thus it requires an extra fee in finding complimentary products for completion of fully functioning software.
An enterprise ERP development is a never stopping process. After the first release, developers continue to gradualy add new features, improvements, and fix issues. Time, needed for development of ERP from scratch, totally relies on the size of the company, needed fucntionality, number of users etc. It is almost imposible to gues how much time will be needed without performing the analysis of each specific case. However, taking into consideration our rich experience in building the ERP systems we can try to define approximated timeframes.
Features and the number of users and user roles of the ERP system go hand in hand. A bigger number of users and user roles result in the need for more features which increase the cost of the ERP system development. The size of the company and volume of the data also affect the features of the ERP system.
Another factor determining the cost an of ERP application development is the workforce. Developers have to know how to how to make ERP and are either in-house or outsourced and choosing between the two mainly depends on the availability of tech-skills of the in-house employees. Outsourcing has one great advantage, the price. You can find plenty of providers who have already completed some number of ERP project for various industry domains and has extensive knowledge of how to develop this kind of enterprise software in the most time and cost-effective manner. The cost of outsourcing varies geographically. For example, in some regions such as the USA, the hourly rate for a developer per hour can reach $180. Locations like Eastern Europe can cost three or four times less, approximately $45 per hour and keep same high-quality thanks to provider’s previous experience.
Same as the timeline, the cost of the in-house ERP development is imposible to be defined without proper investigation of business case and requirements. Still, from our previous experience we can estimate the following numbers for the development of custom ERP for the businesses of different size.
The bottom line is that there are no specific costs of how to build your own ERP system from scratch. However, the approximate costs range is as follows:
- Small Businesses – $25K-$50K
- Medium Businesses – $50K-$100K
- Enterprise – $300K-$500K
Nevertheless, the good news is that a properly designed and implemented custom ERP system has positive returns and pays off fast.
Technology is a dynamic world and to prevent the custom ERP system from going obsolete, upgrading is not only essential but also inevitable. The upgrading fee is likely to be higher when a less popular programing language and technology was used in the system implementation.Upgrading costs include the price of the upgrade, additional hardware and software cost. To reduce these costs, there should be less major changes and integrations required by the development of a dynamic system.
In summary, tailoring an ERP system is a challenging task compared to use of the off-the-shelf solutions. It will cost more in terms of finances and time but it is a more suitable approach to ERP application development process. A custom ERP system becomes part of your company plus it is flexible such that you can add features along the way as the business world changes and your company grows.
Existek is among the best companies in implementation of custom ERP systems. We are a team of experienced developers who are familiar with all components of ERP systems and know exactly how to develop and ERP from scratch. Thus we are very fast and efficient in tailoring ERP systems that solve your specific business challenges. Contact us, we are always ready to help to develop an application that will immediately become your competitive advantage.