How to Build Your Own ERP System: Essence, Cost, and Development Steps

Building an ERP software or enterprise resource planning system lets companies manage multiple business processes from one place. ERP systems aim to regulate and streamline processes that directly affect enterprise performance. It can be accounting, logistics, inventory management, human resources, etc.

However, a lack of technical understanding is one of the main obstacles to successful ERP system implementation. As an IT provider with 10+ years of experience in enterprise-level software solutions, we will share our expertise with you in this complete guide. It will tell how to build an ERP system from scratch, its benefits for businesses, and cost.

Does your organization have a Sales department? Go ahead and integrate it into your ERP system. Does your HR department experience difficulties while hiring and onboarding the raised number of employees? You can create your own ERP software to simplify this process.

Enterprise Resource Planning or ERP stands for dedicated software (web or mobile apps) that encompasses features made for managing business components and departments. ERP systems make interactions between core processes easily manageable.

ERP assists businesses in handling their daily operations while creating a strategic vision of the future of their enterprises. It makes a unified system that can engage every department in the process. The software gathers data from interconnected systems, making it operate to boost the enterprise’s efficiency and reduce costs.

There are two approaches to create Enterprise Resource Planning system (we'll talk about them in detail below) — out-of-the-box and custom. The first type stands for software built for the mass market offering no or little customization opportunities. It means that every company would have to adjust such software for their processes and spend time and money to train employees. As for custom ERP, this solution is modified by an organization’s software engineers to better fit into the company's processes and become more convenient to work with.

Many companies develop ERP systems for internal use. The primary benefit of using a custom ERP system is an opportunity to link various processes and deliver better efficiency to the entire company. For example, the ERP system can let users track the full revenue cycle — from invoices to cash recipients.

Building an ERP system, companies can optimize their workflows, reducing time and expenses. We are ready to tell you more about how the ERP system integration will make your business workflows more comfortable for you and your customers.

Here are several benefits of ERP for business:

• Business process automation. ERP allows putting internal company processes on autopilot. Human resource management, financial management, customer relationship management, etc.
• Data-driven decisions. ERP offers real-time data that is profitable for marketing, management, and accounting. For instance, it’s possible to add a precise lead analysis feature for your sales department. As a result, it’s possible to make balanced decisions faster.
• Improved collaboration. Employees can collaborate more effectively, accessing all necessary company data instead of using separate databases for each department.
• Compliance with industry-leading regulations. ERP systems are effective tools for tracking industry laws and compliance changes. This keeps firms ahead of regulations, legislation, and standards.
• Safeguarding customers' data. On-premise and cloud ERP solutions provide greater security for your business. The ERP system's database backs up sensitive data centrally.
• Boosting customer service. Sales and customer information is stored centrally. Sales managers and client service workers can better interact with clients and eliminate service delays.

Now, it’s time to weigh out what ERP — out-of-the-box or custom — will benefit your business the most.

If you run a small business or startup and pre-built ERP does a great job for you, there may be little sense in a bespoke solution. But as your business scales, you require some level of customization to get a scalable solution satisfying your workflow logic.

Software as a service providers offer various ERP systems for businesses of any size. However, before thinking on how to build software as a services solution, let's examine ready-made solutions you can utilize. For example, Acumatica, Sage Intacct, and SAP Business One are perfect for small and middle businesses. Also, there are solutions like Oracle NetSuite, SAP S/4 HANA, and Microsoft Dynamics for larger companies.

The issue is that out-of-the-box ERP solutions cannot address your unique business need. Besides, ready-made solutions are harder (in some cases, impossible) to integrate with the existing systems, while managing business parts separately isn’t efficient. So it’s better to create ERP from scratch to make the most out of this business decision.

Benefits:

• Budget-friendly. Third-party ERP systems tend to have a monthly or yearly fee. For example, SAP ERP charges $94 per user, per month and $3,000 for the license. If the company has 100 employees, the ERP system will cost $12,400 per month.
• Proven quality. SaaS providers pay attention to product quality and continuously update the product.
• Faster to deploy. Having a small or middle company, you can integrate the software quite fast. However, enterprises can face integration difficulties due to many parts of the product. Your developers can customize parts of the system, manipulating with source code and APIs (this process is usually time-consuming).

Drawbacks:

• Functionality gaps. Out-of-the-box ERPs usually can’t fulfill all business requirements. That’s because they’re built for a mass market rather than a specific company.
• Licensing fees. To use the third-party ERP system, you need to buy a license that can be quite expensive. For example, the Netsuite base license costs $1,000 per month.

More and more enterprises opt to build ERP from scratch to improve their business KPI. Creating a personalized app entails getting a solution highly adaptable to your company's business logic, its processes, and departments, including unique product functionality. Moreover, bespoke applications can adjust to ever-changing business objectives and requirements, while out-of-the-box ones only address short-term needs.

Developing ERP software, you can create organization-specific software and avoid rebuilding workflows just to use software from vendors. It’s possible to add any features you need for finance management, supply chain management, or whatever else. Custom solutions are specifically designed to link to your existing programs and databases, and even with legacy systems. In addition, building ERP from scratch, you get a high-security solution since programmers are free to implement any security features requested.

Benefits:

• Customization. Third-party solutions can have features that you don’t need. In the case of custom development, you only add the necessary functionality.
• Required features. It’s possible to develop features for each department. For example, you can create a precise lead analysis feature for your sales department.

Drawbacks:

• High cost. Custom ERP development might cost you a pretty penny. It’s complicated to calculate the final price because it depends on requirements and the project’s overall complexity.
• Development time. As ERP systems cover the entire company’s work, they’re pretty large. So, the development time is extensive. Not talking about continuous support.

Now, we'll talk more about what is included in the Enterprise Resource Planning systems, representing information in view of the modules. You should consider that the “how to build ERP software” question comprises the creation of different other modules depending on the systems' complexity. Each one offers assistance, contributes to the automation of, and supports various business procedures.

We've made a set of the core modules that should be in every ERP and their functions for you to consider.

• The financial module cares about the automation of transactions and the maintenance of finance regulatory compliance.
• The sales module is responsible for keeping track of order management, contracts, invoicing, customer communication, and other procedures linked to increasing the productivity of the sales department.
• The Research, Development, and Engineering (R&D&E) module gathers information and maintains tools for the purpose of product design and development.
• The inventory and warehouse management module includes the supply chain module's feature set to control the materials used for item manufacturing.
• The asset management module stores information and functionality associated with the company's assets, devices, and infrastructure that are actively in use.
• The manufacturing module helps to guarantee that production meets the current demand and uses the most recent technology and insights to produce superior and more customer-focused things.
• The module for sourcing and procurement is in charge of all the operations included in ordering and purchasing the products and materials for efficient manufacturing.
• The service module enables monitoring of all aspects of your business, facilitating the upkeep of assets and the settlement of problems encountered by customers.
• The human resources module compiles information on staff members and enables the management of functions such as time and attendance recording, payroll processing, performance evaluations, and employee feedback.

We have enlisted only the basic functionality, but you should consider that it can be enlarged according to the aims you’d like to build ERP for.

When we decide on the core functionality of ERP, let’s talk about the crucial steps you should go through along with a proper ERP that will satisfy your company’s needs. It’s recommendable to pass this way along with a skilled software development vendor with in-depth ERP creation expertise.

Building an ERP from scratch seems to be a suitable investment for many companies. Out-of-the-box software can’t provide the set of features every company in the world needs to do its business effectively. That’s why custom ERP can save much money in the long term.

Let’s find out how to make an ERP software step by step with your ERP software development vendor.

To get a quality and valuable product, you need to describe your goals and requirements for the development team. It'd be good to communicate with employees from different departments to figure out their problems and consider how to solve them building ERP.

A quality custom ERP system should be able to manage data flows of different activities (like sales and planning) and automate routine processes. Some enterprises have specific requirements, while the majority want to include such business activities as:

• Sales
• Financing
• HR
• Distribution or delivery, etc.

Please note: you can always apply to the IT company on the Planning stage. The vendor’s experts will make an analysis of your business environment and aims to help you make adequate requirements for your ERP system.

The next step is to choose a proper ERP type. The vendor's specialists will help you choose the best-fitting type of such a solution from the following common ones:

• On-premise ERP gives you complete ERP system security. However, this ERP requires specialized IT staff to maintain applications and servers.
• Cloud ERP. Third-party providers administer cloud-based ERP, often known as Software as a Service (or SaaS shortly). The versatile architecture enables personnel to browse and save data on any device.
• Hybrid cloud ERP is intended for enterprises that require both on-premise and cloud-based ERP. This paradigm lets you employ ERP suppliers' expertise without permitting them access to all your data.
• Open-source ERP. Some businesses may use free or low-cost open-source ERP. Nevertheless, utilizing an ERP means your enterprise will get little support from the vendor, and system improvements and setup are your responsibility.

Design is a significant part of any project. Regarding an ERP system, UI/UX design services will provide you with user-friendly and straightforward interface. ERP software usually has several user roles, navigation buttons, charts, and other elements, and your vendor’s UI/UX designers will thoughtfully care about it. Crafting wireframes and thinking over the user flow before getting to UI design would be a good idea.

Once ready, it’s time to move on with fonts, buttons, and other details. By the way, you can offer your own design sketches or rely on the UI/UX team. However, you should remember that you aim not to overload the ERP software with unnecessary information. It’s better to lay on simplicity.

The vendor’s developers will build an ERP solution from scratch for you. How will it happen? For example, the development process at Cleveroad is divided into the 2-week sprints, after which a development team delivers a part of the functionality or the whole ERP.

Building ERP from scratch requires testing each part of your product. The development team should have several QA engineers to test the system. They test the system to find and fix all the bugs. It’s a good idea to involve your employees in testing ERP software. They’re the best beta testers who’d tell you the weak sides of the system.

The vendor’s developers will also choose a robust tech stack for your solution. The selection will depend on the chosen platforms. So, if you require an ERP for desktop platforms, developers will use C++ or C# (Windows) and Swift or Objective-C (macOS). Software engineers use Angular, JavaScript, and Node.js for the web version. Moreover, during development, it's common to use various third-party integrations, so, the software engineers will integrate services like G Suite, Office 365, and others into your ERP system. They’ll use different APIs from third-party services to access and display the data in the ERP system.

You and your tech partner should also integrate established business processes into your ERP system before you start using it. This will allow you to centralize and interconnect all your business tools and prevent data duplication and loss.

Here are the popular third-party services to integrate into ERP:

• G Suite
• Office 365
• FreshBooks
• Jira
• Salesforce
• SAP

Developing an ERP system isn’t finished after the system is built. You should also care about feedback collection to know your users’ opinions about how the app is functioning and analyze them. Such an activity will help your ERP development vendor specialists understand the product flaws and manage them quickly to offer a qualitative and in-demand product.

How to collect users’ opinions as to your ERP? You can choose the following ways to do that:

• Conduct interviews
• Gather focus groups and do surveys
• Send e-mails
• Use social media, etc.

The enterprise-level systems like ERP need constant work continuing even after their release. The vendor's specialists will upgrade your created system adding more advanced functionality according to the earlier collected user feedback. Moreover, they'll care about bughunting to make the ERP data processing flawless and boost its performance.

The ERP cost may vary from $50,000 to $250,000+. Everything depends on its complexity and your requirements. If you have a team of in-house developers, it won’t be hard to calculate the price to build an ERP. So, contacting the IT service provider to specify details and request more precise numbers is better.

The cost of ERP is impressive. So, the question arises: what does this cost form? Here's the list of the most common price-influencing factors:

• Project complexity. It’s obvious that complicated projects cost more. Developers need more time to build the required features, not talking about a higher qualification.
• Development team. There are three options to cooperate with software developers — cooperate with freelance developers, create an in-house team, or find a reliable vendor. In our experience, in-house developers or outsourcing software development companies are the most suitable option for ERP building. Freelancers tend to fail deadlines. Also, checking the code is complicated unless you're a tech guru.
• Region. Software development cost varies depending on the region. However, the qualification depends on the region. For example, companies from North America charge the highest rates. On the contrary, Asian software companies have the lowest rates, but the product’s quality and customer service are often questionable.
• Seniority level. It’s common to divide mobile app developers into three categories depending on their work experience — junior, middle, and senior. When you develop ERP software, it’s better to hire middle or senior developers. They are experienced in various technologies.

How to successfully implement an ERP system into your company flows? Based on our experience, we’ve prepared a list of advice on how to flawlessly integrate ERP in your company flows.

Tip 1. Choose a reliable tech partner. Hire an experienced partner that supports you throughout the process and beyond. Ask them how your ERP system can solve your unique company problems. Inquire about their procedure and expectations. A roadmap from your partner should include:

• Ways to overcome obstacles
• Internal duties while developing ERP
• Time commitment, etc.

If they can't explain their approach, address your problems, demonstrate expertise with your platform or business, or provide references, they may not be the right partner.

Tip 2. Check your workflows. If you don't fix wasteful processes, a new ERP won't help. In the planning phase, enterprises often identify process difficulties that would continue regardless of new technology. Fixing these issues before installing a new ERP system would improve its performance.

To assess process effectiveness, get input from all workers, stakeholders, and consumers. Businesses also find where a technological solution is needed to enhance processes. They also discover which present procedures can't be optimally duplicated in the new system. Identifying such scenarios ahead of time helps you link requirements to solutions.

Tip 3. Outline the data as well as the working processes. Understand the procedures and data that need migration, as well as any possible setups or changes that may be required to do this.

Additionally, keep in mind that "the data component" consumes a significant amount of time. You may also anticipate that your data journey will be more difficult if your systems are older and more dissimilar from one another. This is particularly true if you operate with a small team pressed for time.

Tip 4. Think out your corporate aims. If your ERP system is draining your money and slowing your growth, you need a new one. So what exactly are the issues that you are attempting to resolve? How can you expand your integration? Your ERP deployment will be harder if you don't know your business drivers.

When you outline your goals and desires and analyze the project's holistic influence on your company, you'll get more out of your integration. You're more likely to get the system and setup you need to compete and flourish. Most of all, when you have a strategy to assess success, you can readily observe how ERP adoption has affected your company and back it up with facts.

These are the major pieces of advice you should keep in mind while working on ERP creation. If you want to know more, we are always ready to give you the necessary consultations and help with the Enterprise Resource Planning system’s creation.

Cleveroad is a skilfull IT company from Estonia (Central/Northern Europe) with 10+ years of experience in the software development market. Our specialization is any-scale custom digital products architecture and delivery for multiple business domains.

By cooperating with us, you’ll get:

• Multi-domain app development expertise — healthcare, retail, financial services, logistics, etc. — we apply personal approach to each client.
• End-to-end service development, including enterprise app development, database development, cloud app development, software consulting and maintenance, and much more.
• An expert IT team encircling agile-oriented, certified, and goal-driven professionals.
• Cutting-edge tool set and progressive software creation methods.
• Full-cycle app testing, QA consulting, and QA automation services to ensure your product fully complies with its requirements and security standards.

For this time, our team has delivered many custom software solutions across industries. Here is one of our enterprise-level solutions for Retail business for automating ecommerce-related operations (RetailOps).

Our client is a US-based eCommerce company that needed a SaaS solution for offering a suite of tools for retailers to streamline its business processes.

Our team has built a retail operations platform from scratch within the SaaS business model. The solution includes all the functionality helping retailers to manage sales operations, including tools for: Purchasing (POM), Catalog/Product Management and Photography (PIM), Marketplace Integration, Distributed Order Management (DOM), and Warehouse/Inventory Management (WMS).

The newly created system allowed our client to provide an exhaustive suite of best-in-breed tools to help retailers effectively manage their retail business flow. The quality of development allowed our customer to attract the target audience and increase the revenue within the given SaaS business model.

Check out how we've built SaaS retail operations platform in more detail.

You can also get an ERP solution for your company. All you need for that is to start contacting us and begin productive cooperation.